Updates to Form 1040 and 2023 Taxes | 2024 Filing

Learn about the latest 2023 tax changes and Form 1040 updates for the 2024 filing season. This guide covers increased deductions, new tax credits, and essential filing dates for efficient tax planning.

Here we’re taking a look at updates for 2023 taxes and the 1040 tax form for doing your taxes in 2024. It’s good to understand this information before you begin your taxes and before you start to fill out the form. Staying informed can really save you from headaches and might even save you some money.

Firstly, the due date for filing your Form 1040 or 1040-SR is April 15, 2024. However, if you’re in Maine or Massachusetts, you’ve got until April 17, 2024, because of Patriots’ Day and Emancipation Day holidays. It’s crucial to keep these dates in mind to avoid any last-minute rush.

Let’s talk about the standard deduction. It’s increased for all filers this year. If you’re filing single or married filing separately, your standard deduction is now $13,850. Married and filing jointly or a qualifying surviving spouse? Your amount is $27,700. And for head of household, it’s $20,800. These increases can make a significant difference in your tax situation.

The additional child tax credit has been increased to $1,600 for each qualifying child. Parents, this is definitely something to keep in mind as it could boost your tax return nicely.

Now, for the eco-friendly folks, there’s a new clean vehicle credit. The credit for new qualified plug-in electric drive motor vehicles has been updated and is now known as the clean vehicle credit. Also, there’s a credit for previously owned clean vehicles, for those acquired and placed in service after 2022. Keep an eye on Form 8936 for these.

Schedule 3 has some new lines too. The residential clean energy credit and the energy-efficient home improvement credit each have their own line now, 5a and 5b. Plus, there’s a new line, 6m, to report the credit for previously owned clean vehicles. And don’t forget about line 13c for reporting the elective payment election amount from Form 3800.

For the self-employed, if you’re taking the self-employed health insurance deduction on Schedule 1, line 17, you’ll now use Form 7206 instead of Pub. 535.

Starting in 2023, you can make a one-time distribution up to $50,000 from an individual retirement account to charities through various trusts or a charitable gift annuity. This could be a significant change for your charitable giving strategy.

If you reach age 72 in 2023, your first required minimum distribution is due by April 1, 2025. It’s always good to plan ahead for these things.

Retired public safety officers, you can exclude up to $3,000 for health insurance premiums from income. Definitely something to consider for your retirement planning.

There are new exceptions to the 10% additional tax for early distributions from retirement plans, particularly in connection with federally declared disasters and distributions made to terminally ill individuals.

The IRS is rolling out a Direct File pilot during the 2024 filing season. If you have a simple tax return, you might be able to file directly with the IRS for free. Keep an eye on IRS.gov/DirectFile for updates on this.

Now, onto some additional updates for 2023. The Inflation Reduction Act has extended certain energy-related tax breaks and updated the deduction for energy-efficient commercial buildings. This means more deductions for reducing your building’s energy costs.

The top tax rate remains 37% for individual single taxpayers with incomes over $578,125, and there are adjustments to the other tax brackets too.

The Alternative Minimum Tax exemption amount is $81,300, phasing out at $578,150. For married couples filing jointly, it starts at $126,500 and begins to phase out at $1,156,300.

The Earned Income Tax Credit has been increased to $7,430 for taxpayers with three or more qualifying children.

The monthly limitation for qualified transportation fringe benefits and parking has been increased to $300.

The dollar limit for health flexible spending arrangements is now $3,050, and the carryover amount is $610.

Medical Savings Account users will see new deductible and out-of-pocket expense limits for both self-only and family coverage.

The foreign earned income exclusion is now $120,000.

Estates of decedents who die during 2023 have a basic exclusion amount of $12,920,000.

The annual exclusion for gifts is now $17,000.

The maximum credit allowed for adoptions is $15,950.

And remember, the personal exemption remains at $0, and there’s no limitation on itemized deductions.

So there you have it, a comprehensive overview of the key updates to the 2023 1040 form. Remember, staying informed and proactive about these changes can really benefit you when tax season rolls around.

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Money Instructor does not provide tax, legal, or investment advice. This material has been prepared for educational and informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or investment advice. You should consult your own tax, legal, and investment advisors regarding your own financial situation. Although the information has been researched and vetted beforehand, it may not be current at the time of viewing. Please note, the context of financial investments can be complex and dynamic, necessitating professional advice tailored to your unique circumstances.