January 21, 2025 • 22 mins
In this episode of the Teaching Tax Flow podcast, hosts John Tripolsky and Chris Picciurro jump into the crucial tax filing updates for 2024, making sure listeners are well-prepared for the new tax season. With their signature blend of insightful advice and engaging banter, the hosts explore the potential impact of both current and anticipated changes to U.S. tax laws.
Listeners who tune in to this engaging discussion will gain essential insights into the nuances of the Tax Cuts and Jobs Act adjustments, as well as important updates on standard deductions and tax brackets. Chris especially highlights the significance of understanding one's marginal tax rate over their tax bracket. Additionally, they touch on the implications of the new 1099K reporting rules, IRA changes, and earned income tax credits, all while making the subject matter accessible to everyone, from tax novices to seasoned professionals.
Key Takeaways:
- Adjustments to standard deductions for 2024 could significantly impact your tax filing strategy.
- The introduction of the 1099K reporting rule change may affect how digital transactions are reported and perceived.
- Bonus depreciation percentages have decreased, which may alter tax strategies for self-employed individuals and business owners.
- Changes to the earned income tax credit and digital asset reporting are anticipated, potentially affecting many taxpayers.
- Estate and gift tax exclusions have seen an increase, providing new estate planning opportunities.
Notable Quotes:
- "Your marginal tax rate is more important than your tax bracket." - Chris Picciurro
- "This is why we're doing the podcast, John. This is why people want to listen to this podcast." - Chris Picciurro
- "Be aware of that rule and don't be alarmed. The rule changed." - Chris Picciurro
- "We are right now in the highest estate tax exclusion era ever." - Chris Picciurro
- "Tax agencies are your involuntary business partner." - Chris Picciurro
Resources:
- FREE On-Demand Session: https://event.webinarjam.com/register/9/mz4qqtg
- Tax Prep Services: www.2025.tax
Episode Sponsor:
Sunsets & Dinks
www.teachingtaxflow.com/pickleball
CODE: TTF15
- (00:00) - 2024 Tax Filing Updates and Pickleball Gear Discounts
- (03:21) - Repetitive Streaming Ads and Target Market Confusion
- (04:09) - Tax Changes and Inflation Impact on Deductions and Brackets
- (07:33) - Understanding New 1099K Rules and Their Impact on Transactions
- (12:12) - Tax Changes in Bonus Depreciation and Estate Planning for 2024
- (18:15) - IRS Introduces 1099 DA Form for Digital Asset Reporting
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Intro (00:02):
Welcome back to the teaching tax flow podcast,
everybody. Episode 119. On thisepisode, we are gonna look at
some tax filing updates for theyear 2024. But before we do
that, as always, let's take abrief moment and thank our
episode sponsor.
Ad Read (00:22):
Hi. Chris Pacuro here, founder of Teaching Tax Flow,
cohost of the Teaching Tax Flowpodcast, and pickleball
enthusiast. Yes. If you listento the podcast, you know almost
every episode we talk aboutpickleball, the most popular and
growing sport in America. Wehave tons of opportunities for
paddles and and pickleballs, butwe don't have a lot of great
gear on the market.
(00:42):
Well, I'm so excited to announcethat Sunsets and Dinks are now a
sponsor of the Teaching Tax Slowpodcast and produce amazing
gear, not only to look at, butyou feel confident on the court.
Because you are part of theTeaching Tax Slow community, you
get a 15% discount on all yourorders with them. I know I love
the gear I received and I havequite a good record while
(01:04):
wearing it, believe it or not,even at my level. Go to teaching
tax flow.com backslashpickleball and simply enter t t
f fifteen in the serve up promocode area of your paddle rack.
John Tripolsky (01:20):
Alright, everybody. Here we are again
looking at some updates that wehave, this time at 2024 tax
filing year. So if we're lookingback, obviously, you're
listening to this here in 2025.Congratulations. You survived
the new year.
We're looking at when it comesto filing your taxes this year
for last year. So if you heardthat, I'll say it one more time,
(01:42):
what you're going to be filingthis year for your 2024
activities. So as always, ChrisBucchero, welcome back to the
show, sir. How are you?
Chris Picciurro (01:51):
I am wonderful. Good to see you again, Johnny t.
John Tripolsky (01:54):
Hey. I I survived the New Year. You
survived the New Year. We got acouple episodes in. I'd say
we're doing alright.
Chris Picciurro (01:59):
We are doing great. We are starting to get to
that point where many taxpayersare compiling their information
to have the 2024 tax returnprepared. We are still under the
Tax Cuts and Jobs Act of 2017,so there aren't too many major
major changes, but there aresome things you wanna be aware
of for the 2025 tax preparationyear, now that we're in 2024. So
(02:23):
what we wanna do this podcasttalking through those 2023 to
2024 changes, and, you know, theteaching tax law team is gonna
keep you abreast of any majordevelopments in tax law, as the
new administration comes in aswell throughout 2025. But let's
this is kinda that peak time ofyear where you're seeing all the
commercials online about taxpreparation and people dancing
(02:45):
on the side of the street wavingin, of course, you know, or you
could be a self preparer, or youcan have a very, excuse me,
complicated situation.
The bottom line is let's look atthese changes from 23 to 24 and
break them down for ourlisteners.
John Tripolsky (03:00):
Absolutely. Especially if you, know, you
mentioned the commercials thateverybody's seen, especially if
you stream some things and youhave, I can't remember which
platform. I've just seen it onover the over the weekend, but
it's like you get the samecommercial not once, but, like,
4 times in a row. You're like,just get out of the way. I get
the point.
So we promise to not repeatourselves as much as that, but
(03:21):
some of
Chris Picciurro (03:22):
the stuff here kinda, you
John Tripolsky (03:23):
know, peeks its head up a couple
Chris Picciurro (03:24):
times. Other than sports, pretty much my wife
and I watch everything ondemand. Most of it we record so
we could whip through thosecommercials. But once in a
while, we'll find a new show orwe get caught up on stuff, which
is rare. And we we get go into ashow where we have to watch the
commercials, and you're right.
On some of these streamingservices, you will literally see
(03:45):
the same commercial back to backwhere they have it might be an
hour show, and they have 3 totalcommercials. They just go, you
know, it's funny though becausethen then we kinda make a joke
of it and say, well, wait asecond. Why is, why is every
commercial about some type ofweight loss thing? You know,
it's like, are we the reallytarget market of who they're
trying to see right now? Right.
(04:07):
Right.
John Tripolsky (04:07):
Can I get what you're talking about at least
what we're talking about hereapplies to everybody as long as
you pay taxes in the in thecountry itself?
Chris Picciurro (04:13):
This does apply to everyone. So let's start off
with no. The first one is gonnabe adjustments to the standard
deduction. So married filing weknow that with the and there's
an episode on itemizeddeductions versus standard
deduction, but we know thateveryone's entitled to a
standard deduction on their taxreturn, and if your itemized
deductions, which are reportedon schedule a, exceed the
(04:34):
standard deduction, then youshould take the itemized
deductions. That being said, thestandard deduction with tax cuts
and jobs that got significantlyraised, and now it's at the
highest level that I've everseen, maybe in the history.
It's probably the highest levelever. I mean, for so for married
filing jointly, your standarddeduction's $29,200, that's up
(04:55):
from 277 in 2023. Single filersare at 146 or half that, and
then a household, 21,009. Sothose increases were pretty
significant. Typically, thesestandard a lot of the,
adjustments that we're talkingabout and changes are linked to
cost of living adjustments.
We did see, a lot moreinflation, in, you know, 2024,
(05:17):
and some of these things are arereflected in that.
John Tripolsky (05:20):
And, Chris, before we go on to another one
too, just to clarify for somepeople that may have, you know,
not listened to every show thatwe've done. If you haven't,
shame on you. We should befollowing this. But what exactly
so we mentioned married, filingjointly, single filers, and head
of household. What exactlyqualifies as a head of household
when it comes to filing?
Chris Picciurro (05:37):
Typically, a head of household is gonna be
someone that is unmarried, yethas a qualifying dependent, and
it doesn't necessarily have tobe a child. It actually could be
a parent in some situations, butthe vast majority ahead of
household is gonna be someonethat's unmarried, and they have
a dependent. So
John Tripolsky (05:56):
Excellent.
Chris Picciurro (05:57):
Typically, it's gonna be a child. Mhmm. For
sure. Yeah. Absolutely.
So so the you see these standarddeductions getting higher. We
also saw the tax bracketsadjusting. Right? So 37%. Well,
it's just because there are tonsof tax brackets.
And, you know, John, one of themost important things we talk
about is your marginal tax rateis more important than your tax
(06:17):
bracket. But let's just talkthat 37% tax bracket, which is
the highest tax bracket, nowgets triggered, for single
filers at anything over $609,000up from 578,000 ish in 23, and
731,000 for married couplesfiling jointly up from 6.93. So,
(06:39):
again, those are pretty bigjumps in in really, it's related
to the, you know, related to theinflation situation.
John Tripolsky (06:48):
And over history, I don't know the answer
to this one, but, you know, Ifeel like, at least in recent
history, we've always seenincreases in those. Have there
ever been times previously thatyou know of where it's gone
down?
Chris Picciurro (07:00):
I've never I not that I know of. Mhmm. I just
thought about what's going on.Maybe it's stayed consistent,
but that's a good question.Probab but not not to not to my
memory where that's got actuallygotten decreased.
Now if tax cuts and jobs actgets reduced or does go go away,
which it's scheduled to, thenwe're gonna see the standard
(07:21):
deductions go back down to pretax custom jobs act, levels, but
you would also have some otherdeductions. Then you would see
more people itemizing in thestate and local income tax might
be more generous. So now anotherthing we talk about is the 10.99
k. Now you know I'm veryprivileged to be part of the
National Association of TaxProfessionals and be one of the
(07:42):
tax season update instructors,and I've had you know, it's
really humbling and an honor toto be able to teach hundreds of
other tax professionals thislast winter. One of the things
we talked about was the 10.99 kthreshold changing.
I call this, the Taylor Swiftrules. Right? And maybe it's not
appropriate because her her, youknow, her con her her concerts
(08:04):
or her tour is gone. So maybeI'm gonna change this, to the
cub scout parent rule. What do Imean by that?
Well, John, you know when we goto the grocery store, and I was
a cub scout for many years, thatthe cub scouts sell popcorn.
Right? And that's one of theirfundraise. You can say the girl
scouts sell cookies. And whathappens a lot of times is that
one of the the leaders in theden or the pack or whatever the,
(08:28):
you know, the group willpurchase all that popcorn, but
when you're going in topurchase, you know, the popcorn
or the cookies In Kroger, theyjust say, hey.
Just Venmo me. Well, there'salways that one person that gets
a bunch of Venmo money. Theydon't keep the money. They
actually turn it in to pay forthe popcorn. The point is they
(08:49):
might get a 10.99 k, and itmight look like they're in some
type of business because nowthey are receiving more than the
limit allowed before you getissued a 10.99 k.
So in 2023, there's been a lotof activity with this rule. In
2023, unless you had $20,000 ofgross payments come in or 200
(09:10):
transactions, you would notreceive a 10.99 k, let's just
say, from from Venmo. This goesfor all third party payment
organizations, which is gonna beVenmo, Etsy, PayPal. But let's
just say Venmo. Okay?
That threshold for 2024 getsreduced down to $5,000, and it
doesn't matter how manytransactions. So 20,000 is a
(09:31):
lot, but, you know, a whole packof cub scouts could easily
generate more than $5,000 worthof popcorn sales. And let's say,
John, you're that person that'scollecting all the money and
sending it off, you're gonna geta 10.99 k from those popcorn
sales.
John Tripolsky (09:47):
And now so many scenarios really would happen. I
mean, that could be, like Oh.Office Christmas parties, bridal
showers, things, anything.
Chris Picciurro (09:57):
Think about this, John. Think about it like
and this is for the year. Thinkabout a situation where you
yeah. Concert tickets. That'swhy I always call it a Taylor's
let's say I I a buddy of mineand I was very fortunate.
There's 8 of us who went on apickleball trip. And one of the
guys rented the house, createdeverything, and I think it was
(10:17):
like $1100 a guy. Right? There's8 of us. We all Venmo'd him.
11. He didn't make any money onthis. So last year he probably
was okay. If we did that in 20,or or I'm sorry. For 23.
That happened in 24. He's gonnaget a 10.99 k from Venmo. Mhmm.
Oh, and he's a good friend ofmine too.
John Tripolsky (10:35):
Then he's gonna call you for advice and ask you
what to do. So
Chris Picciurro (10:38):
but he's he's really he's actually a CPA also.
So he'll he'll know what to do.But, but the thing is and that's
actually a great topic, John,for some content on our YouTube
channel. What to do when you geta 10.99 k and you're not in
business. Right?
So there are specific reportingguidelines, that you don't wanna
ignore it. You have to rep youneed to report this. So you're
(10:59):
gonna get a letter from IRS mostlikely. It's called a CP 2,000.
So if they're if you're not in,so, yeah, actually, you just
motivated me.
I'm gonna add that to to some ofour content to what. But if you
get a 10.99 k, and you're not inany type of business, it was a
kind of an innocent situationwhere you're, yeah, collecting
money for concert tickets,travel, bridal party, then
(11:22):
definitely talk to your taxprofessional and do not even
know where that. So be aware ofthat rule, and don't be alarmed.
The rule changed. So that's whywe're doing the podcast, John.
That's why people wanna listento this podcast.
John Tripolsky (11:33):
Probably be a lot of people getting those, you
know, when the, your favoritefootball team, the Detroit
Lions, go to the Super Bowl.
Chris Picciurro (11:39):
Oh, boy. Well, think
John Tripolsky (11:40):
about some tickets.
Chris Picciurro (11:42):
Well, of course, we don't advocate any
type of, any any type of illegalactivities, but think about
squares for football. Mhmm. Fanor fantasy football. Now a lot
of times there's there's appsthat can help you out with that.
But, anyway, so 1099 k ruleschange significantly.
A lot of people in theaccounting community, and I
believe the IRS, would like tosee the $20,000 limit be in
(12:05):
place, because it just reportcreates a bunch more reporting.
Now that limit was $600 at onepoint, by the way. So well, so
what else has changed? Well, nowthis one kinda touches on people
that own a business or peoplethat are self employed. Bonus
depreciation percentage gotreduced from 80% to 60%.
(12:27):
It's scheduled to phase out to40% this year, 20% and 26, and
then it goes bye bye. Now we doanticipate there might be some
movement with this rule with thenew administration, but bonus
depreciation is the backbone forcost segregation studies. It's
the backbone for doing beingable to deduct fixed asset
(12:47):
purchases for business owners.So right now, bonus appreciation
is at 60% for 2024, Assetsplaced in the service in 24,
there was 80% in 2023. Sodefinitely go back.
Let's enter that costsegregation study, content.
Check out the YouTube channel. Iknow I sound like a walking
commercial. We do have a lotmany lessons on bonus
depreciation, but be aware thatthat went down to 60% here. That
(13:12):
could change, but it went downto 60%.
So another change, kinda on theopposite spectrum of the, the
bet, 37% marginal, the taxbracket is the earned income tax
credit. So the earned income taxcredit is a credit out there for
people that are at a lowertaxable income, situation. The
(13:36):
vast majority of them havedependents, but not all of them.
And ultimately, it's a nonrefund or it's a refundable
credit, meaning even if theydon't have the tax, they can get
that credit to really help themwith their living expenses. And
the maximum went from $74130.23all the way up to 7830, for
(13:57):
2024.
So that's a pretty big jump aswell. When earned income credit
kinda works like a bell curve,you start qualifying at certain
amount of income, it peaks out,and then it phases down. So this
is first this is this earnedincome tax credit is for does
designed for households in thatlower taxable income situation,
(14:17):
that typically have dependents,but you don't have to have
dependents. Yep.
John Tripolsky (14:23):
So it's and And I know that was one of the
acronyms that we've mentionedaround a couple of times, the
IETC.
Chris Picciurro (14:29):
Yeah. Yeah. Well, yeah, there's all these
acronyms, John, when you, youknow, you you feel,
John Tripolsky (14:34):
The EITC. I messed that one up.
Chris Picciurro (14:37):
Yeah. That's EIC. Some people call it earned
income credit EIC. Some peoplecall it EITC. Then we had the
ERC.
You remember the, the employeeretention credit or the ERTC,
the employee retention taxcredit. But this is the this has
been around for a long time.It's the earned income credit or
earned income tax credit. Wetalk a lot about estate and gift
(14:58):
taxes, in the teaching tax flowcommunity. We know that with the
Tax Cuts and Jobs Act scheduledto go away, the estate and
income tax the estate taxexclusion is going to get
significantly reduced.
So anyone who has a significantamount of assets, you definitely
wanna be talking to your estateplanning attorneys in 2024, in
my opinion. The annual gift taxexclusion increased from 17,000
(15:20):
to 18,000. That means, John,when you and your wife are
feeling benevolent, you couldeach give myself, my wife, and
all of our kids $18,000 each andpay no tax, we pay no tax, and
it's not even reportable. That'sthat annual gift tax exclusion.
If, John, when you're feelinggenerous, if you say, you know
what?
I'm gonna give you and your wifeand kids $20,000 each and so
(15:42):
will so will your wife. At thatpoint, the amount that go is
above the annual gift taxexclusion does start working
against your lifetime estate taxexclusion. Here, they that went
from 12,900,000 to $13,600,000in, so this is by far the
largest, estate tax exclusionamount that I've ever seen.
(16:02):
There was one gap year. I thinkit was 2020 10.
I believe it's the year thatGeorge Steinbrenner passed away
where we had a gap, where we hadno estate tax. So this is the
estate taxes up to $13,600,000.If you give away more than your
annual gift tax exclusion, youstart chipping away at that
amount. So if you're in thatsituation where you're doing
(16:23):
some estate planning, definitelytalk to a a a the state planning
attorney and your taxprofessional to do that proper
planning because we are rightnow in the highest estate tax
exclusion era ever.
John Tripolsky (16:34):
And I feel like we touched on that just very
briefly on the other side of it.We did an episode, I believe,
not too long ago on step up inbasis.
Chris Picciurro (16:42):
Absolutely. Yeah. Yep. It it plays a role in
step up in basis. We're gonnahave some additional content
coming down the road, that talksabout, you know, that talks
about estate estate planning,and and and something called
DSUE, which is the deceasedspousal unused exemption.
But, yeah, absolutely. There'sthere's some opportunities there
(17:06):
for people that are either thatthat wanna do some estate
planning, and right now, they'relocking in to a good situation.
So that wealth transfer wealthtransfer planning right now is a
good time to to consider that.Yep. Now so those are the main,
the main changes.
There are were some changes withSecure 2.0 with employers, that
(17:29):
have retirement plans that youwanna be aware of. Because you
know what? Even though theholiday season's over, we're
feeling benevolent, and we'regonna give you a sneak peek at
something coming down thepipeline. We will have another
entire episode on this down theroad. Starting here, January 1,
(17:50):
2025 and beyond, there's asignificant change to digital
asset reporting.
Now we know that about a fewyears ago, the IRS put on your
form 10 40, which is a personalreturn, an innocent little
question, yes, no question thatsays, are you involved in
digital assets? Did you sell,buy, you know, trade any of
(18:11):
these assets? And you have tosay yes or no. In the reporting,
it was always required if youdid that. However, the IRS and
the federal government reallyhad issues figuring out how to
match it up.
Right? Because the exchangeslike Coinbase or were any any of
these they weren't required toissue you any type of tax forms,
(18:33):
and they weren't required toissue any to the IRS. It was all
self reporting, and it's kind ofthe wild west. So because of
that, the the federal governmentsaid, look, we've got to clean
this up. This is my opinion, ofcourse.
Okay? I'm paraphrasing. We'vegotta clean this up, and we need
to make a new form. So they madea new form called a 1099 d a,
(18:55):
stands for digital assets, andit's very much like a 1099 b,
okay, which is a 1099 issued bya brokerage. So you're gonna so
John, like, let's say you andyour wife have a brokerage
account and you, you know, youit could be with a Robin Hunter.
It could be with a big Fidelityor it could be with anyone. At
the end of the year, they reportany sales of your mutual funds
(19:17):
to EFT securities. Well, nowthose same rules are gonna be in
a play for digital assets. Sothe 1099 d a, the draft is out
there on the IRS website. It'sgetting cleaned up and
finalized, but it's gonna berequired for transactions
occurring on or after January 1,2025.
And brokers are gonna berequired to file this with the
(19:38):
IRS and provide their customerscopies of this in early 2026. So
a year from right now, any ofyour digital asset activity will
now be reported to the IRS. Andand that includes not just the
sale of a digital asset, but theswapping of digital assets as
well, because that's all goingto be, reportable. So it's it's
(20:02):
quite interesting, and I thinkit's gonna lead to a lot of, you
know, a lot more a lot morereporting. I mean, again, you're
supposed to be reporting this nomatter what.
John Tripolsky (20:16):
And, really, it's just the IRS kinda getting
in getting in tune with things.Right? Like, they're they know
what's going on. Right now,they're just making it a little
bit more form specific, if wewill. Right?
Chris Picciurro (20:27):
Well, absolutely. I mean, they they
need to, yeah, whenever there'sa tax gap, right, they try to
clean it up by creating a form.The 10.99 k, they felt like
there's a big tax gap. Nowremember, one of the laws of
teaching tax law, tax agenciesare your involuntary business
partner. So they get to makesome rules, and they get to make
(20:48):
new forms.
So as of, you know, as of end oflast year, there is a, like I
said, draft of the 1099 d a.Actually, John, if we wanna feel
fat and sassy, we could eventhrow on the show notes if you
wanna take a peek at It's very,very interesting. And, what
they're asking for, but it doesmirror the 1099 b. So
(21:10):
Absolutely. Yeah.
John Tripolsky (21:10):
We'll pop that in there. And then also too, if
for those that are listening orwatching, check out, 2025.tax.
So 2025.tax. So there's no dotcom at the end of that. If
you're looking for a tax repair,it's actually something we
created at Teaching Tax Flow.
Helps to kinda connect you withthe best person. There's some
packages out there, multiplelevels depending on whatever
(21:32):
your needs are. But then alsotoo, Chris, this was well, not
too long ago, we did a sessionon tax prep readiness that is
going to be actually, I think itis now, available for on demand.
So anybody can go ahead and andwatch that. It's pretty short.
15 minutes or so. We kinda powerthrough a bunch of q and a that
we got from individuals, fromthe community, from the private
(21:53):
Facebook group, etcetera. We hadsome fun doing that. So I'll put
that link in the show notes aswell, and, yeah, they're they're
free to watch, free to chimeinto, and, you know, fill out
that quick form and check outthat 2025 dot tax. But as
always, we'll see everybody backhere next week.
Same time roughly, completelydifferent topic on the Teaching
Taxable podcast.
Disclaimer (22:14):
The content provided is for educational purposes
only. We encourage you to seekpersonalized investment advice
from your financialprofessional. For all tax and
legal advice, please consultyour CPA or attorney. Investment
advisory services are offeredthrough Cabin Advisors, a
registered investment adviser.Securities are offered through
Cabin Securities, a registeredbroker dealer.
The content of this podcast doesnot constitute an offer of
(22:35):
securities. Offerings can only
be made through an offeringmemorandum, and you should
carefully examine the riskfactors and other information
contained in memorandum, and youshould carefully examine the
risk factors and otherinformation contained in the
memorandum.
Welcome back to the teaching tax flow podcast,
everybody. Episode 119. On thisepisode, we are gonna look at
some tax filing updates for theyear 2024. But before we do
that, as always, let's take abrief moment and thank our
episode sponsor.
Ad Read (00:22):
Hi. Chris Pacuro here, founder of Teaching Tax Flow,
cohost of the Teaching Tax Flowpodcast, and pickleball
enthusiast. Yes. If you listento the podcast, you know almost
every episode we talk aboutpickleball, the most popular and
growing sport in America. Wehave tons of opportunities for
paddles and and pickleballs, butwe don't have a lot of great
gear on the market.
(00:42):
Well, I'm so excited to announcethat Sunsets and Dinks are now a
sponsor of the Teaching Tax Slowpodcast and produce amazing
gear, not only to look at, butyou feel confident on the court.
Because you are part of theTeaching Tax Slow community, you
get a 15% discount on all yourorders with them. I know I love
the gear I received and I havequite a good record while
(01:04):
wearing it, believe it or not,even at my level. Go to teaching
tax flow.com backslashpickleball and simply enter t t
f fifteen in the serve up promocode area of your paddle rack.
John Tripolsky (01:20):
Alright, everybody. Here we are again
looking at some updates that wehave, this time at 2024 tax
filing year. So if we're lookingback, obviously, you're
listening to this here in 2025.Congratulations. You survived
the new year.
We're looking at when it comesto filing your taxes this year
for last year. So if you heardthat, I'll say it one more time,
(01:42):
what you're going to be filingthis year for your 2024
activities. So as always, ChrisBucchero, welcome back to the
show, sir. How are you?
Chris Picciurro (01:51):
I am wonderful. Good to see you again, Johnny t.
John Tripolsky (01:54):
Hey. I I survived the New Year. You
survived the New Year. We got acouple episodes in. I'd say
we're doing alright.
Chris Picciurro (01:59):
We are doing great. We are starting to get to
that point where many taxpayersare compiling their information
to have the 2024 tax returnprepared. We are still under the
Tax Cuts and Jobs Act of 2017,so there aren't too many major
major changes, but there aresome things you wanna be aware
of for the 2025 tax preparationyear, now that we're in 2024. So
(02:23):
what we wanna do this podcasttalking through those 2023 to
2024 changes, and, you know, theteaching tax law team is gonna
keep you abreast of any majordevelopments in tax law, as the
new administration comes in aswell throughout 2025. But let's
this is kinda that peak time ofyear where you're seeing all the
commercials online about taxpreparation and people dancing
(02:45):
on the side of the street wavingin, of course, you know, or you
could be a self preparer, or youcan have a very, excuse me,
complicated situation.
The bottom line is let's look atthese changes from 23 to 24 and
break them down for ourlisteners.
John Tripolsky (03:00):
Absolutely. Especially if you, know, you
mentioned the commercials thateverybody's seen, especially if
you stream some things and youhave, I can't remember which
platform. I've just seen it onover the over the weekend, but
it's like you get the samecommercial not once, but, like,
4 times in a row. You're like,just get out of the way. I get
the point.
So we promise to not repeatourselves as much as that, but
(03:21):
some of
Chris Picciurro (03:22):
the stuff here kinda, you
John Tripolsky (03:23):
know, peeks its head up a couple
Chris Picciurro (03:24):
times. Other than sports, pretty much my wife
and I watch everything ondemand. Most of it we record so
we could whip through thosecommercials. But once in a
while, we'll find a new show orwe get caught up on stuff, which
is rare. And we we get go into ashow where we have to watch the
commercials, and you're right.
On some of these streamingservices, you will literally see
(03:45):
the same commercial back to backwhere they have it might be an
hour show, and they have 3 totalcommercials. They just go, you
know, it's funny though becausethen then we kinda make a joke
of it and say, well, wait asecond. Why is, why is every
commercial about some type ofweight loss thing? You know,
it's like, are we the reallytarget market of who they're
trying to see right now? Right.
(04:07):
Right.
John Tripolsky (04:07):
Can I get what you're talking about at least
what we're talking about hereapplies to everybody as long as
you pay taxes in the in thecountry itself?
Chris Picciurro (04:13):
This does apply to everyone. So let's start off
with no. The first one is gonnabe adjustments to the standard
deduction. So married filing weknow that with the and there's
an episode on itemizeddeductions versus standard
deduction, but we know thateveryone's entitled to a
standard deduction on their taxreturn, and if your itemized
deductions, which are reportedon schedule a, exceed the
(04:34):
standard deduction, then youshould take the itemized
deductions. That being said, thestandard deduction with tax cuts
and jobs that got significantlyraised, and now it's at the
highest level that I've everseen, maybe in the history.
It's probably the highest levelever. I mean, for so for married
filing jointly, your standarddeduction's $29,200, that's up
(04:55):
from 277 in 2023. Single filersare at 146 or half that, and
then a household, 21,009. Sothose increases were pretty
significant. Typically, thesestandard a lot of the,
adjustments that we're talkingabout and changes are linked to
cost of living adjustments.
We did see, a lot moreinflation, in, you know, 2024,
(05:17):
and some of these things are arereflected in that.
John Tripolsky (05:20):
And, Chris, before we go on to another one
too, just to clarify for somepeople that may have, you know,
not listened to every show thatwe've done. If you haven't,
shame on you. We should befollowing this. But what exactly
so we mentioned married, filingjointly, single filers, and head
of household. What exactlyqualifies as a head of household
when it comes to filing?
Chris Picciurro (05:37):
Typically, a head of household is gonna be
someone that is unmarried, yethas a qualifying dependent, and
it doesn't necessarily have tobe a child. It actually could be
a parent in some situations, butthe vast majority ahead of
household is gonna be someonethat's unmarried, and they have
a dependent. So
John Tripolsky (05:56):
Excellent.
Chris Picciurro (05:57):
Typically, it's gonna be a child. Mhmm. For
sure. Yeah. Absolutely.
So so the you see these standarddeductions getting higher. We
also saw the tax bracketsadjusting. Right? So 37%. Well,
it's just because there are tonsof tax brackets.
And, you know, John, one of themost important things we talk
about is your marginal tax rateis more important than your tax
(06:17):
bracket. But let's just talkthat 37% tax bracket, which is
the highest tax bracket, nowgets triggered, for single
filers at anything over $609,000up from 578,000 ish in 23, and
731,000 for married couplesfiling jointly up from 6.93. So,
(06:39):
again, those are pretty bigjumps in in really, it's related
to the, you know, related to theinflation situation.
John Tripolsky (06:48):
And over history, I don't know the answer
to this one, but, you know, Ifeel like, at least in recent
history, we've always seenincreases in those. Have there
ever been times previously thatyou know of where it's gone
down?
Chris Picciurro (07:00):
I've never I not that I know of. Mhmm. I just
thought about what's going on.Maybe it's stayed consistent,
but that's a good question.Probab but not not to not to my
memory where that's got actuallygotten decreased.
Now if tax cuts and jobs actgets reduced or does go go away,
which it's scheduled to, thenwe're gonna see the standard
(07:21):
deductions go back down to pretax custom jobs act, levels, but
you would also have some otherdeductions. Then you would see
more people itemizing in thestate and local income tax might
be more generous. So now anotherthing we talk about is the 10.99
k. Now you know I'm veryprivileged to be part of the
National Association of TaxProfessionals and be one of the
(07:42):
tax season update instructors,and I've had you know, it's
really humbling and an honor toto be able to teach hundreds of
other tax professionals thislast winter. One of the things
we talked about was the 10.99 kthreshold changing.
I call this, the Taylor Swiftrules. Right? And maybe it's not
appropriate because her her, youknow, her con her her concerts
(08:04):
or her tour is gone. So maybeI'm gonna change this, to the
cub scout parent rule. What do Imean by that?
Well, John, you know when we goto the grocery store, and I was
a cub scout for many years, thatthe cub scouts sell popcorn.
Right? And that's one of theirfundraise. You can say the girl
scouts sell cookies. And whathappens a lot of times is that
one of the the leaders in theden or the pack or whatever the,
(08:28):
you know, the group willpurchase all that popcorn, but
when you're going in topurchase, you know, the popcorn
or the cookies In Kroger, theyjust say, hey.
Just Venmo me. Well, there'salways that one person that gets
a bunch of Venmo money. Theydon't keep the money. They
actually turn it in to pay forthe popcorn. The point is they
(08:49):
might get a 10.99 k, and itmight look like they're in some
type of business because nowthey are receiving more than the
limit allowed before you getissued a 10.99 k.
So in 2023, there's been a lotof activity with this rule. In
2023, unless you had $20,000 ofgross payments come in or 200
(09:10):
transactions, you would notreceive a 10.99 k, let's just
say, from from Venmo. This goesfor all third party payment
organizations, which is gonna beVenmo, Etsy, PayPal. But let's
just say Venmo. Okay?
That threshold for 2024 getsreduced down to $5,000, and it
doesn't matter how manytransactions. So 20,000 is a
(09:31):
lot, but, you know, a whole packof cub scouts could easily
generate more than $5,000 worthof popcorn sales. And let's say,
John, you're that person that'scollecting all the money and
sending it off, you're gonna geta 10.99 k from those popcorn
sales.
John Tripolsky (09:47):
And now so many scenarios really would happen. I
mean, that could be, like Oh.Office Christmas parties, bridal
showers, things, anything.
Chris Picciurro (09:57):
Think about this, John. Think about it like
and this is for the year. Thinkabout a situation where you
yeah. Concert tickets. That'swhy I always call it a Taylor's
let's say I I a buddy of mineand I was very fortunate.
There's 8 of us who went on apickleball trip. And one of the
guys rented the house, createdeverything, and I think it was
(10:17):
like $1100 a guy. Right? There's8 of us. We all Venmo'd him.
11. He didn't make any money onthis. So last year he probably
was okay. If we did that in 20,or or I'm sorry. For 23.
That happened in 24. He's gonnaget a 10.99 k from Venmo. Mhmm.
Oh, and he's a good friend ofmine too.
John Tripolsky (10:35):
Then he's gonna call you for advice and ask you
what to do. So
Chris Picciurro (10:38):
but he's he's really he's actually a CPA also.
So he'll he'll know what to do.But, but the thing is and that's
actually a great topic, John,for some content on our YouTube
channel. What to do when you geta 10.99 k and you're not in
business. Right?
So there are specific reportingguidelines, that you don't wanna
ignore it. You have to rep youneed to report this. So you're
(10:59):
gonna get a letter from IRS mostlikely. It's called a CP 2,000.
So if they're if you're not in,so, yeah, actually, you just
motivated me.
I'm gonna add that to to some ofour content to what. But if you
get a 10.99 k, and you're not inany type of business, it was a
kind of an innocent situationwhere you're, yeah, collecting
money for concert tickets,travel, bridal party, then
(11:22):
definitely talk to your taxprofessional and do not even
know where that. So be aware ofthat rule, and don't be alarmed.
The rule changed. So that's whywe're doing the podcast, John.
That's why people wanna listento this podcast.
John Tripolsky (11:33):
Probably be a lot of people getting those, you
know, when the, your favoritefootball team, the Detroit
Lions, go to the Super Bowl.
Chris Picciurro (11:39):
Oh, boy. Well, think
John Tripolsky (11:40):
about some tickets.
Chris Picciurro (11:42):
Well, of course, we don't advocate any
type of, any any type of illegalactivities, but think about
squares for football. Mhmm. Fanor fantasy football. Now a lot
of times there's there's appsthat can help you out with that.
But, anyway, so 1099 k ruleschange significantly.
A lot of people in theaccounting community, and I
believe the IRS, would like tosee the $20,000 limit be in
(12:05):
place, because it just reportcreates a bunch more reporting.
Now that limit was $600 at onepoint, by the way. So well, so
what else has changed? Well, nowthis one kinda touches on people
that own a business or peoplethat are self employed. Bonus
depreciation percentage gotreduced from 80% to 60%.
(12:27):
It's scheduled to phase out to40% this year, 20% and 26, and
then it goes bye bye. Now we doanticipate there might be some
movement with this rule with thenew administration, but bonus
depreciation is the backbone forcost segregation studies. It's
the backbone for doing beingable to deduct fixed asset
(12:47):
purchases for business owners.So right now, bonus appreciation
is at 60% for 2024, Assetsplaced in the service in 24,
there was 80% in 2023. Sodefinitely go back.
Let's enter that costsegregation study, content.
Check out the YouTube channel. Iknow I sound like a walking
commercial. We do have a lotmany lessons on bonus
depreciation, but be aware thatthat went down to 60% here. That
(13:12):
could change, but it went downto 60%.
So another change, kinda on theopposite spectrum of the, the
bet, 37% marginal, the taxbracket is the earned income tax
credit. So the earned income taxcredit is a credit out there for
people that are at a lowertaxable income, situation. The
(13:36):
vast majority of them havedependents, but not all of them.
And ultimately, it's a nonrefund or it's a refundable
credit, meaning even if theydon't have the tax, they can get
that credit to really help themwith their living expenses. And
the maximum went from $74130.23all the way up to 7830, for
(13:57):
2024.
So that's a pretty big jump aswell. When earned income credit
kinda works like a bell curve,you start qualifying at certain
amount of income, it peaks out,and then it phases down. So this
is first this is this earnedincome tax credit is for does
designed for households in thatlower taxable income situation,
(14:17):
that typically have dependents,but you don't have to have
dependents. Yep.
John Tripolsky (14:23):
So it's and And I know that was one of the
acronyms that we've mentionedaround a couple of times, the
IETC.
Chris Picciurro (14:29):
Yeah. Yeah. Well, yeah, there's all these
acronyms, John, when you, youknow, you you feel,
John Tripolsky (14:34):
The EITC. I messed that one up.
Chris Picciurro (14:37):
Yeah. That's EIC. Some people call it earned
income credit EIC. Some peoplecall it EITC. Then we had the
ERC.
You remember the, the employeeretention credit or the ERTC,
the employee retention taxcredit. But this is the this has
been around for a long time.It's the earned income credit or
earned income tax credit. Wetalk a lot about estate and gift
(14:58):
taxes, in the teaching tax flowcommunity. We know that with the
Tax Cuts and Jobs Act scheduledto go away, the estate and
income tax the estate taxexclusion is going to get
significantly reduced.
So anyone who has a significantamount of assets, you definitely
wanna be talking to your estateplanning attorneys in 2024, in
my opinion. The annual gift taxexclusion increased from 17,000
(15:20):
to 18,000. That means, John,when you and your wife are
feeling benevolent, you couldeach give myself, my wife, and
all of our kids $18,000 each andpay no tax, we pay no tax, and
it's not even reportable. That'sthat annual gift tax exclusion.
If, John, when you're feelinggenerous, if you say, you know
what?
I'm gonna give you and your wifeand kids $20,000 each and so
(15:42):
will so will your wife. At thatpoint, the amount that go is
above the annual gift taxexclusion does start working
against your lifetime estate taxexclusion. Here, they that went
from 12,900,000 to $13,600,000in, so this is by far the
largest, estate tax exclusionamount that I've ever seen.
(16:02):
There was one gap year. I thinkit was 2020 10.
I believe it's the year thatGeorge Steinbrenner passed away
where we had a gap, where we hadno estate tax. So this is the
estate taxes up to $13,600,000.If you give away more than your
annual gift tax exclusion, youstart chipping away at that
amount. So if you're in thatsituation where you're doing
(16:23):
some estate planning, definitelytalk to a a a the state planning
attorney and your taxprofessional to do that proper
planning because we are rightnow in the highest estate tax
exclusion era ever.
John Tripolsky (16:34):
And I feel like we touched on that just very
briefly on the other side of it.We did an episode, I believe,
not too long ago on step up inbasis.
Chris Picciurro (16:42):
Absolutely. Yeah. Yep. It it plays a role in
step up in basis. We're gonnahave some additional content
coming down the road, that talksabout, you know, that talks
about estate estate planning,and and and something called
DSUE, which is the deceasedspousal unused exemption.
But, yeah, absolutely. There'sthere's some opportunities there
(17:06):
for people that are either thatthat wanna do some estate
planning, and right now, they'relocking in to a good situation.
So that wealth transfer wealthtransfer planning right now is a
good time to to consider that.Yep. Now so those are the main,
the main changes.
There are were some changes withSecure 2.0 with employers, that
(17:29):
have retirement plans that youwanna be aware of. Because you
know what? Even though theholiday season's over, we're
feeling benevolent, and we'regonna give you a sneak peek at
something coming down thepipeline. We will have another
entire episode on this down theroad. Starting here, January 1,
(17:50):
2025 and beyond, there's asignificant change to digital
asset reporting.
Now we know that about a fewyears ago, the IRS put on your
form 10 40, which is a personalreturn, an innocent little
question, yes, no question thatsays, are you involved in
digital assets? Did you sell,buy, you know, trade any of
(18:11):
these assets? And you have tosay yes or no. In the reporting,
it was always required if youdid that. However, the IRS and
the federal government reallyhad issues figuring out how to
match it up.
Right? Because the exchangeslike Coinbase or were any any of
these they weren't required toissue you any type of tax forms,
(18:33):
and they weren't required toissue any to the IRS. It was all
self reporting, and it's kind ofthe wild west. So because of
that, the the federal governmentsaid, look, we've got to clean
this up. This is my opinion, ofcourse.
Okay? I'm paraphrasing. We'vegotta clean this up, and we need
to make a new form. So they madea new form called a 1099 d a,
(18:55):
stands for digital assets, andit's very much like a 1099 b,
okay, which is a 1099 issued bya brokerage. So you're gonna so
John, like, let's say you andyour wife have a brokerage
account and you, you know, youit could be with a Robin Hunter.
It could be with a big Fidelityor it could be with anyone. At
the end of the year, they reportany sales of your mutual funds
(19:17):
to EFT securities. Well, nowthose same rules are gonna be in
a play for digital assets. Sothe 1099 d a, the draft is out
there on the IRS website. It'sgetting cleaned up and
finalized, but it's gonna berequired for transactions
occurring on or after January 1,2025.
And brokers are gonna berequired to file this with the
(19:38):
IRS and provide their customerscopies of this in early 2026. So
a year from right now, any ofyour digital asset activity will
now be reported to the IRS. Andand that includes not just the
sale of a digital asset, but theswapping of digital assets as
well, because that's all goingto be, reportable. So it's it's
(20:02):
quite interesting, and I thinkit's gonna lead to a lot of, you
know, a lot more a lot morereporting. I mean, again, you're
supposed to be reporting this nomatter what.
John Tripolsky (20:16):
And, really, it's just the IRS kinda getting
in getting in tune with things.Right? Like, they're they know
what's going on. Right now,they're just making it a little
bit more form specific, if wewill. Right?
Chris Picciurro (20:27):
Well, absolutely. I mean, they they
need to, yeah, whenever there'sa tax gap, right, they try to
clean it up by creating a form.The 10.99 k, they felt like
there's a big tax gap. Nowremember, one of the laws of
teaching tax law, tax agenciesare your involuntary business
partner. So they get to makesome rules, and they get to make
(20:48):
new forms.
So as of, you know, as of end oflast year, there is a, like I
said, draft of the 1099 d a.Actually, John, if we wanna feel
fat and sassy, we could eventhrow on the show notes if you
wanna take a peek at It's very,very interesting. And, what
they're asking for, but it doesmirror the 1099 b. So
(21:10):
Absolutely. Yeah.
John Tripolsky (21:10):
We'll pop that in there. And then also too, if
for those that are listening orwatching, check out, 2025.tax.
So 2025.tax. So there's no dotcom at the end of that. If
you're looking for a tax repair,it's actually something we
created at Teaching Tax Flow.
Helps to kinda connect you withthe best person. There's some
packages out there, multiplelevels depending on whatever
(21:32):
your needs are. But then alsotoo, Chris, this was well, not
too long ago, we did a sessionon tax prep readiness that is
going to be actually, I think itis now, available for on demand.
So anybody can go ahead and andwatch that. It's pretty short.
15 minutes or so. We kinda powerthrough a bunch of q and a that
we got from individuals, fromthe community, from the private
(21:53):
Facebook group, etcetera. We hadsome fun doing that. So I'll put
that link in the show notes aswell, and, yeah, they're they're
free to watch, free to chimeinto, and, you know, fill out
that quick form and check outthat 2025 dot tax. But as
always, we'll see everybody backhere next week.
Same time roughly, completelydifferent topic on the Teaching
Taxable podcast.
Disclaimer (22:14):
The content provided is for educational purposes
only. We encourage you to seekpersonalized investment advice
from your financialprofessional. For all tax and
legal advice, please consultyour CPA or attorney. Investment
advisory services are offeredthrough Cabin Advisors, a
registered investment adviser.Securities are offered through
Cabin Securities, a registeredbroker dealer.
The content of this podcast doesnot constitute an offer of
(22:35):
securities. Offerings can only
be made through an offeringmemorandum, and you should
carefully examine the riskfactors and other information
contained in memorandum, and youshould carefully examine the
risk factors and otherinformation contained in the
memorandum.
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