Rates are set by fiscal year, effective October 1 each year. Find current rates in the continental United States ("CONUS Rates").
Example #1: Schedule SE Computation - Self-employment income only:
Schedule SE:
Example #2: Schedule SE Computation - Self-employment income PLUS W-2 wages from a job:
1. Schedule C, line 31 Net profit: $175,000
2. W-2 Gross Wages from a job: $25,000
Schedule SE:
Deduction for Half of Self-employment Tax:
The deduction for half of the self-employment tax is an above-the-line deduction , which means it is subtracted from gross income in arriving at adusted gross income (AGI). You do not have to itemize your deductions to claim an above-the-line deduction. Enter this deduction on Schedule 1 (Form 1040 or Form 1040-SR), Part II, Line 15, Deductible part of self-employment tax.
| Taxable Income Threshold | 0% | 15% | 20% |
|---|---|---|---|
| Married Filing Jointly / Surviving Spouse | $1 - $94,050 | $94,051 - $583,750 | $583,751 and over |
| Head of Household | $1 - $63,000 | $63,001 - $551,350 | $551,351 and over |
| Single | $1 - $47,025 | $47,026 - $518,900 | $518,901 and over |
| Married Filing Separately | $1 - $47,025 | $47,026 - $291,850 | $291,851 and over |
| Collectibles gain | Maximum rate | 28% | |
| Unrecaptured Section 1250 gain on depreciated real estate | Maximum rate | 25% |
Contributions to a traditional IRA or Roth IRA can be made regardless of age, provided you have earned income (or other eligible income).
Qualifying Property:
For qualifying property placed in service in 2024, first-year expensing is allowed up to a limit of $1,220,000. The limit begins to phase out if the total cost of qualifying property exceeds $3,050,000.
Section 179 Deduction Phase-out:
If the cost of qualifying property placed in service in 2024 is more than $3,050,000, you reduce the $1,220,000 expensing limit dollar-for-dollar for each dollar the cost of qualifying property exceeds $3,050,000 (but not below zero).
For example, if you place machinery in service during 2024 costing $3,170,000, the $1,220,000 deduction limit is reduced by $120,000 ($3,170,000 - $3,050,000). The reduced limit of $1,100,000 ($1,220,000 - $120,000) is entered on Form 4562, Part 1, line 5 (Dollar limitation for tax year).
If the cost of the property was $4,270,000 or more, no first-year expensing deduction would be allowed for 2024 because it would be completely phased out ($4,270,000 - $3,050,000) = $1,220,000.
2024 Bonus Depreciation (Section 168(k):
Bonus depreciation is an additional first-year depreciation allowance equal to a set percentage of the adjusted basis of eligible property. The percentage for bonus depreciation for 2024 is 60% (a 20% decline from 2023). Bonus depreciation is fully deductible for alternative minimum tax purposes; no adjustment is required. Bonus depreciation is also referred to as a "Section 168(k) allowance" and a "special depreciation allowance".
Bonus depreciation can be claimed for any property with a recovery period of 20 years or less, computer software that is not a Section 197 intangible, and buildings that replace or rehabilitate property damaged, destroyed, or condemned as a result of a federally declared disaster. Eligible property also includes the costs of television, film, and theatrical production and the cost of certain plants that are planted and grafted.
Keep in mind, if you fail to make an election not to claim bonus depreciation, then you are deemed to have claimed it even if you did not and must reduce the basis of the property by the amount of bonus depreciation that could have been claimed. You may elect out of the additional first-year depreciation (bonus depreciation) by attaching a statement to your return specifying the asset class which you do not want to claim bonus depreciation. For example, you can elect out of bonus depreciation for all five-year property while claiming it for seven-year property.
Report bonus depreciation in Form 4562, Part II labeled "Special Depreciation Allowance", unless the property is "listed property". For listed property, use Part V of Form 4562.
Vehicle:
For a vehicle placed in service in 2024 and used over 50% for business, the first-year depreciation limit using bonus depreciation is $20,400. However, if you elect to opt out of using bonus depreciation, or you're not eligible for bonus depreciation, the first-year depreciation limit is $12,400 (it excludes $8,000 bonus depreciation). Keep in mind, the maximum $20,400 ceiling assumes 100% business use and must be reduced for personal use.
Reminder:
You must itemize your deductions to take a deduction for charitable contributions. The special rules under the Consolidated Appropriations Act (CAA) that allowed non-itemizers to deduct charitable contributions without itemizing their deductions in tax years 2020 and 2021 expired.
The child tax credit for 2024 is $2,000 per qualifying child under age 17 at the end of the year.. The credit begins to phase out when MAGI exceeds $400,000 if married filing jointly or $200,000 for all other filers. You must complete Schedule 8812 (Form 1040 or 1040-SR) to determine the amount of the credit. You determine if the potential credit ($2,000 x number of qualifying children) is limited by the phaseout rule.
On Part I of Schedule 8812, the $2,000 per qualifying child credit for 2024 is phased out if your c(MAGI, exceeds the following phaseout threshold:
Modied Adjusted Gross Income (MAGA) is generally the same as Adusted ross Income - AGI).
The tentative credit, figured on Schedule 8812, is compared with your tax liability (regular tax plus alternative minimum tax minus specified credits) and the smaller amount is the allowable child tax credit. If your child tax credit is limited to your tax liability, part or all of the excess credit may be refundable as an additional credit (ACTC) if your earned income exceeds $2,500 or you have three or more children.
The term refundable tax credit means that if the credit exceeds your tax liability, you would receieve a refund for the excess amount over the tax liability. For example, if your tax liability is $2,000 and your refundable credit is $2,200, you would receive a refund of $200. However, if the $2,200 tax credit was not a refundable credit, the $2,000 tax liability would be eliminated but the excess $200 credt would not be refuded to you.
To claim the child tax credit or the additional child tax credit:
Dependent Care Credit and Exclusion:
If you have children under age 13 or other dependents, and you hire someone to care for them while you work full-time or part-tiime, yoy may qualify for a tax credit for the expenses. In addiition, you may claim the credit if you workd from home and pay someone to care for your child while you are there. If your employer has a plan qualifying for tax-free child care and, if you're covered, you may be unable to claim the tax credit.
For 2024, the child and dependent care credit is nonrefundable. In figuring the credit, you take qualifying expenses into account, $3,000 for one qualifying person and $6,000 for two or more qualifying persons. The credit ranges from 35% down to 20%, depending on adjusted gross income. The exclusion for dependent care under an employer's dependent care assistance plan is $5,000 ($2,500 if married filing seperately).
For 2024 the maximum EIC amount is $4,213 for one qualifying child, $6,960 for two qualifying children, $7,830 for three or more qualifying children, and $632 for taxpayers who have no qualifying child. The phaseout ranges for the EIC have been adjusted for inflation. The excessive investment income limit is $11,600.
For 2024, the premium tax credit is allowed even if household income exceeds 400% of the federal poverty line. The required contributions are reduced.
If you purchased health care coverage in 2024 through a government exchange (The Health Insurance Marketplace) and your household income is at least 100% of the federal poverty line (FPL), you may be able to claim a tax credit on Form 8962 when you file your 2024 return. Those with household income above 400% of the FPL for tax years 2021 through 2025 may claim the credit, which was not the case for tax years prior to 2021.
If you received an advance of the credit that went directly to your insurance company and it was applied to your monthly premiums, you must complete Form 8962 to reconcile the advance payments you received with the amount of the credit that you were actually entitled to. You may have received advance payments that were either more or less than what you were actually entitled to receive. This could happen depending on changes to your income or family composition between the time you received the advance payments and when you file your 2024 return.
If your allowable credit on Form 8962 exceeds the advance payments, the excess amount is called the Net Premium Tax Credit, which can be claimed as a refundable credit on Line 9 of Schedule 3 (Form 1040 or 1040-SR), which means it will be paid to you even if it exceeds your tax liability.
However, if the advance payments were more than the allowable credit, you must pay back the excess, up to a limit. The repayment is an additional tax that must be reported on Line 2 of Schedule 2 (Form 1040 or 1040-SR). To complete Form 8962, you'll need to enter amounts shown on Form 1095-A, which you will receive from the Marketplace through which you obtained coverage. Form 10995-A shows a month-by-month breakdown of the coverage premiums for you and your family as well as the advance payments you received.