Tax Season 2024: Direct File Expansion, New 1099-K Rules, and Standard Deduction Increase

Direct File Program Expansion:

The IRS has expanded its Direct File program to cover 13 additional states. The program allows taxpayers to file their returns directly with the IRS for free. This year, Direct File includes new features such as automatic W-2 import and support for a wider range of tax credits.

Eligibility:

To qualify for Direct File, individual filers must earn less than $200,000 annually, and couples filing jointly must earn less than $250,000. The program excludes certain types of income, including capital gains and rental earnings.

1099-K Reporting for Gig Workers and Small Businesses:

New reporting rules under the American Rescue Plan Act require third-party payment apps like PayPal and Venmo to issue 1099-K forms for business transactions over $5,000. This is designed to reduce tax fraud by capturing unreported income.

Standard Deduction Adjustment:

The standard deduction has been increased to $14,600 for individuals and $29,200 for couples. This makes itemizing deductions less beneficial for a majority of taxpayers who prefer the convenience and simplicity of the standard deduction.

Other Notable Changes:

* Free File remains available for taxpayers earning less than $84,000 annually.
* The Zelle payment app is not subject to the 1099-K reporting requirements due to its unique operating model.

For more information and eligibility confirmation, visit the IRS website.