Happy 2025!
This year we will again be implementing a deadline for all our individual tax return clients to provide us their tax documents in order for us to get our work completed by the original due date of April 15,2025.
Please provide your tax documents no later than March 18, 2025. If your tax documents are not received by this date, we will continue to work diligently on your 2024 tax return preparation, but will first file an extension on your behalf and subsequently submit your tax return for filing after the original due date. We thank you in advance for your understanding and cooperation. By complying with our tax document submission deadline, you enable us to maintain the high quality tax services to which you are accustomed.
Here are some key items relating to the 2024 tax year filing, and a few for 2025 planning, where cited:
- The Corporate Transparency Act’s beneficial ownership (BOI) reporting provision requires reporting companies to disclose identifying information of their beneficial owners has been suspended due to a Texas court ruling. This is currently subject to ongoing litigation and may be subject to change.
- Standard deduction is as follows:
a. Single $14,600
b. Married filing joint $29,200
c. Head of household $21,900 - Medical expense deduction threshold is 7.5% of adjusted gross income. For NJ, you can deduct unreimbursed medical expenses you paid during the year that are more than 2% of your gross income.
- SALT Deduction (State and Local Tax Deduction) including such items as state income and real estate taxes is capped at $10,000, or $5,000 if married filing separately. The Pass-Through Business Alternative Income Tax Act (BAIT) is available. This Act allows individuals the opportunity to work around the SALT cap. In order to take advantage you would have to be an owner of a partnership or S Corporation, and the respective entity would pay the state income tax at the entity level thus receiving a federal tax deduction for the taxes paid.
- Mortgage interest deduction is limited to interest paid during the year on the first $1,000,000 of qualified mortgage debt obtained prior to December 16, 2017. If the mortgage was obtained after December 15, 2017, then the mortgage interest deduction is limited to interest paid during the year on the qualified mortgage debt of $750,000. These dollar limits apply to the combined mortgages on your main home and second home.
- Mortgage insurance premiums are no longer deductible.
- Charitable contributions are allowed up to 60% of your adjusted gross income (AGI), but in some cases, 20% 30%, or 50% limits may apply. Standard mileage rate is 14 cents per mile driven in service of charitable organizations.
- Miscellaneous itemized deductions are generally limited to the following:
a. Gambling losses only to the extent of gambling winnings.
b. Casualty and theft losses on income-producing property including Ponzi-type investment
schemes; Casualty and theft losses on personal-use property only if the loss is attributable
to a federally declared disaster.
c. Federal estate tax on income in respect of a decedent.
d. Amortizable bond premiums on taxable bond
e. An ordinary loss attributable to a contingent payment debt instrument or an inflation-
indexed debt instrument.
f. Deduction for repayment of amounts under a claim of right if over $3,000.
g. Certain unrecovered investment in an annuity.
h. Impairment-related work expenses of a disabled person.
i. Excess deductions (including administrative expenses) allowed a beneficiary on
termination of an estate or trust
j. Unlawful discrimination claims - Educator expense deduction is $300 for 2024.
- Effective January 1, 2023, the age for taking a required minimum distribution from a retirement account is age 73 and will increase to age 75 on January 1, 2033.
- Federal child tax credit is $2,000 for children under age of 17. This amount is subject to phase out limits for modified adjusted gross income limits. New Jersey has a child tax credit of $1,000 per child for ages 5 and under. NJ child tax credit is available to tax payers with New Jersey taxable income of $80,000 or less.
- Federal child dependent care credit has a maximum credit of $3,000 for one qualifying child and maximum $6,000 for two or more qualifying children. New Jersey’s Child and Dependent Care Credit is for taxpayers with taxable income of $150,000 or less.
- For 2024 kiddie tax is as follows, the first $2,600 of unearned income qualifies to be taxed at the child’s income tax rate and any amount over that is subjected to the parent’s normal tax bracket.
- Energy efficient home improvement credit has an annual credit limit of $1,200, which covers 30% of the costs for items such as windows, skylights exterior doors for property placed in service through 2032.
- Clean energy credit for residential energy efficient property is 30% for solar electric, solar water heaters, fuel cells, wind and geothermal energy generating systems for expenditures through 2032.
- Clean vehicle credit is $7,500 for new qualifying vehicles purchases and $4,000 for used qualifying vehicles.
- All or part of retirement income can be excluded pursuant to NJ retirement income exclusion for retirees who are 62 or older with total income $150,000 or less.
- NJ Veterans Exemption is $6,000 for 2024.
- NJ health insurance mandate requires its residents to maintain health coverage throughout the year, unless the taxpayer qualifies for an exemption. Failure to have coverage may result in a shared responsibility payment.
- Qualified business deduction allows taxpayers to deduct up to 20% of their qualified business income. Phase out range for specified service trades or business (SSTB) for 2024 starts at taxable income of $383,900 for married filing jointly and is completely phased out at $483,900.All other filings, phase out range (SSTB) starts at $191,950 and completely phases out at $241,950. If your business income is not from a SSTB then there is no phase out of the deduction, but a wage / investment limitation applies once income thresholds are met.
- Standard business mileage deduction for 2024 is 67 cents per mile.
- Business meals are 50% deductible for 2024 and conitue to be subjected to strict documentation requirements.
- Estate tax exemption is $13.61 million per individual (or 27.22 million for a married couple) for 2024; these amounts increase to $13.99 million per individual (or 27.98 million for a married couple) for 2025.
- Annual gift exclusion is for 2024 and 2025 is $18,000 and $19,000, respectively.
- The IRS considers digital assets (e.g., Bitcoin) as property for U.S. federal income tax purposes. As such, any transactions in, or transactions that use, digital assets are subject to the same general tax principles that apply to other property transactions.
These are some of the tax provisions that are in effect for the tax year 2024, and future where cited. If you have any questions, do not hesitate to contact us directly.
CAPALDI REYNOLDS & PELOSI, P.A