Lisa Hahn, CPA lhahn@rubino.com

Robert Tempchin, CPA rtempchin@rubino.com

Craig Carlini, CPA
ccarlini@rubino.com

Dave Albert, CPA   dalbert@rubino.com

Vikita Shah, EA  vshah@rubino.com

Call us
301.564.3636

Federal Tax Updates

End of the year 2024 due dates and reminders

Forms 1099-NEC and W-2

Due date for 2024 Form 1099-NEC and Form W-2 – The due date for distributing these forms to recipients and for filing them with the IRS is January 31, 2025. Please get in touch with your tax advisor for the timely filing of these forms.

Fourth quarter estimated tax payment 2024

The fourth and final Federal estimated tax payment for tax year 2024 is due on January 15, 2025 for individual taxpayers and December 15, 2024 for corporate taxpayers.

These estimated tax payments can be made online using IRS Direct pay.

Highlights of changes for 2025

Standard deduction rates

The standard deduction amounts for tax year20242025
Single or married filing separately$14,600$15,000
Married filing jointly or qualifying surviving spouse$29,200$30,000
Head of household$21,900$22,500

The additional standard deduction amount in 2025 for the aged or blind is $1,600 ($2,000 if unmarried and not a surviving spouse)

Health Savings Account (HSA)

The annual HSA contribution limits for 2024:

  • $4,150 for self-only coverage
  • $8,300 for family coverage

The annual HSA contribution limits for 2025:

  • $4,300 for self-only coverage
  • $8,550 for family coverage

The catch-up contribution for those 55 or older is $1,000 in 2024 and 2025

Foreign Earned Income Exclusion

For tax year 2025, the foreign earned income exclusion increases to $130,000, from $126,500 in tax year 2024.

Annual gift & estate tax exemption/exclusion

Tax year20242025
Gift & Estate Tax exemption$13,610,000$13,990,000
Annual Gift Tax Exclusion$18,000$19,000

401K contribution limits

The annual contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is increased to $23,500 in 2025, up from $23,000. The catch-up contribution for participants 50 and over remains $7,500. However, a substantially higher catch-up contribution applies to individuals aged 60 to 63. For 2025, they are allowed a catch-up contribution of $11,250 rather than $7,500.

The limit on annual contributions to an IRA remains $7,000. The IRA catch‑up contribution limit for individuals aged 50 and over is $1,000 for 2025.

Did you get a notice from the IRS?

You may receive a notice from the IRS. If you do, don’t panic! There are several reasons why you may hear from the IRS. They may need to verify your identity, or propose changes to your return. They may also want to inform you of a delay in processing your return. The notice generally mentions the reason you are receiving the notice as well as the necessary steps you should take and the date by which you should  respond (if a response is required).  The notice will usually have  a CP or LTR number in the right hand corner of the correspondence. You can go to the IRS website and search for the CP/LTR number to get more details.

You should do the following:

  • Review the letter carefully.
  • Act promptly.
  • Reply only if instructed.
  • Dispute the notice if you disagree.
  • Watch for scams.

Contact us if you have any questions regarding notices you may have received.

Tax fraud prevention and identity protection – IP

To strengthen protection against tax-related identity theft, the IRS recommends obtaining an Identity Protection Personal Identification Number (IP PIN). This six-digit code serves as a safeguard, preventing unauthorized individuals from filing federal tax returns using your Social Security number or Individual Taxpayer Identification Number. The IP PIN is valid for one calendar year.

To acquire an IP PIN, visit IRS.gov and either create a new account or log into your existing one. Once logged in, follow the identity verification process to receive your unique IP PIN.

Brief on post-election tax implications

The Republican victory in the 2024 U.S. election may have significant implications for tax policy in the coming years.

Here are a few possible tax changes which may occur under Republican leadership:

One of the most anticipated changes is a potential reduction in the corporate tax rate. Currently 21%, there is speculation that this rate could be reduced to 20% ; some analysts believe that it may be lowered to 15%.

The extension of provisions from the Tax Cuts and Jobs Act (TCJA) is another area of focus. An extension could maintain items such as lower individual income tax rates, the expanded standard deduction, and the 20% deduction for pass-through income (Section 199A).

New individual tax exemptions and deductions are being considered, such as the elimination of taxation on tip income and overtime pay, and a potential tax deduction for car loan interest. Also under consideration is the elimination or raising of the cap on state and local tax deductions, which could provide relief to taxpayers in high-tax states.

The Republican administration is also expected to preserve or expand the estate tax exemption. If no action is taken, the estate and gift tax exclusion is scheduled to revert to a projected amount of approximately $7 million per individual ($5 million, indexed for inflation) after 2025.

The upcoming year should prove to be an interesting one for individuals and businesses alike. We at Rubino are here to assist you with evolving tax legislation.

State Tax Updates

District of Columbia

The District established a new refundable income tax credit for tax years beginning after December 31, 2024 under the Child Tax Credit Amendment Act.

For each eligible dependent child under 6 years of age as of December 31, 2025, a credit of $420 is available for up to three children. However, this credit is reduced by $20 for every $1,000 (or part thereof) by which the taxpayer’s adjusted gross income surpasses a specific income threshold.

These income thresholds vary based on filing status; for 2025, the phase-out of the credit begins at:

  • $160,000 for single filers, heads of household, or qualifying widow(er)s
  • $240,000 for married couples or registered domestic partners filing jointly or separately on the same return
  • $120,000 for individuals who are married but filing separately

Starting in 2026, the credit amount will be increased by the cost-of-living adjustment for that year. The income thresholds will also be indexed to the cost-of-living adjustment each year.

Related Postings

© 2024 Rubino All Rights Reserved