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Key IRS Tax Credits for 2024: What You Need to Know

As we approach the 2024 tax season, the IRS has announced several updates to tax credits that could significantly impact taxpayers. Here’s a comprehensive overview of the key changes and what they mean for you:

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10/8/20242 min read

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Expanded Earned Income Tax Credit (EITC)

For 2024, the maximum Earned Income Tax Credit (EITC) amount has increased to $7,830 for qualifying taxpayers with three or more qualifying children, up from $7,430 in 2023 1. This credit is designed to benefit low to moderate-income working individuals and families, providing a substantial boost to those who qualify.

Child Tax Credit (CTC) Adjustments

The Child Tax Credit (CTC) remains a crucial benefit for families. For 2024, the credit amount is up to $2,000 per qualifying child under the age of 17. The refundable portion of the credit, known as the Additional Child Tax Credit (ACTC), allows eligible taxpayers to receive up to $1,500 as a refund, even if they owe no tax 2.

Energy Efficient Home Improvement Credit

The IRS has updated the Energy Efficient Home Improvement Credit, which now covers a broader range of energy-saving home improvements. Homeowners can claim a credit of up to 30% of the cost of eligible improvements, such as installing energy-efficient windows, doors, and insulation 3. This credit aims to encourage homeowners to make environmentally friendly upgrades to their properties.

Clean Vehicle Credit

The Clean Vehicle Credit continues to support the purchase of electric and plug-in hybrid vehicles. For 2024, the credit amount can be up to $7,500, depending on the vehicle’s battery capacity and other factors 2. This credit is part of the IRS’s efforts to promote sustainable transportation options.

Employee Retention Credit (ERC) Updates

The IRS has also provided updates on the Employee Retention Credit (ERC), which was introduced to help businesses keep employees on their payroll during the COVID-19 pandemic. The IRS is accelerating the processing of ERC claims and continuing compliance work to prevent improper payments 4. Businesses are encouraged to review their claims to ensure they meet the eligibility criteria.

Education Credits

Education credits, such as the American Opportunity Tax Credit (AOTC) and the Lifetime Learning Credit (LLC), remain valuable for students and their families. The AOTC offers up to $2,500 per eligible student for qualified education expenses, while the LLC provides up to $2,000 per tax return 2. These credits can help offset the cost of higher education.

Inflation Adjustments

In addition to specific credits, the IRS has made inflation adjustments to various tax provisions for 2024. These adjustments include changes to the standard deduction, income tax brackets, and other key tax items 1. Staying informed about these adjustments can help taxpayers plan more effectively for the upcoming tax season.

These updates reflect the IRS’s ongoing efforts to support taxpayers and promote compliance with tax laws. By understanding and utilizing these credits, you can maximize your tax benefits and potentially reduce your tax liability. If you have any questions or need assistance with your tax planning, consider consulting a tax professional.

2 : IRS News Releases for Current Month 1: IRS Provides Tax Inflation Adjustments for Tax Year 2024 4: IRS Moves Forward with Employee Retention Credit Claims 3: IRS Updates FAQs for Energy Efficient Home Improvement Credit

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