Reminder for security alerts and scams
Last year for Form 5405 Repayment of First Time Home Buyer Credit
New Digital Assets form 1099-DA
Energy Efficient Home Credit Form 8909
New Form 15620 for Section 83(b) Election
Secure Act 2.0 updates
BOI- Back in Action
Natural Disasters
2024 Tax Year for the most part was tame. Not many changes, but the IRS did provide a few new updates and forms. Rather than go through all the changes, I’ll just highlight a few of changes that affect most taxpayers. Please note that this tax blog is based on current tax guides and may change over time.
IRS Communications and Safety reminders. If you haven’t already, please go ahead to www.irs. gov and sign up for your tax account. It’s the most secure method of receiving IRS communications. By signing up your own secured tax account, you can look up your own tax records, transcripts, and payment records. Be wary of any suspicious emails, IRS won’t email you directly. All communications should be sent through your tax portal.
Last Year of Form 5405 Repayment of First Home Buyer Credit.
This is the last year IRS is issuing form 5405. Additional information can be found here.
Form 1099-DA.
For those who have cryptocurrency transactions in 2024, please provide 1099-DA form. It will be provided by the brokerage firm.
Form 8909 Energy Efficient Home Credit.
For taxpayers who have hired contractors that have installed energy efficient items in their homes, they will need to provide certification information to take the Energy Efficient Home Credit.
New Form 15620 for Section 83 (b) Election.
Taxpayers who are filing section 83 (b) election now have a new form 15620, instead of filling in “Other income”.
Secure Act 2.0
Emergencies and financial hardships early withdrawals without penalties.*
I personally don’t recommend doing this, because there are many rules. Up to $1000 can be withdrawn without 10% early withdrawal penalty, but you still need to pay taxes on this. You can only do this once every 3 years, if the principle isn’t repaid. You can do this once a year if the taxpayer repays the amount. For domestic abuse victims, they can withdraw up to $10k or 50% of the account, but it must be repaid within 3 years and recoup any taxes paid. Taxpayers with terminal illness can withdraw without penalties, but the doctor must certify expected lifetime of less than 84 months. Federal disaster victims can withdraw up to $22k, but the withdrawal amount must be repaid over 3 years and recoup any taxes paid.
529 to Roth IRA.
Starting in 2024, beneficiaries of 529 college savings plans can roll over excess benefits to a Roth IRA up to $35k. 529 plan must have been open for at least 15 years. Rollovers are subject to annual Roth IRA contribution limit. Income levels are not relevant for this rollover.
RMD rules.
When to take RMDs? If your year of birth is 1960 or later, take your RMD at 75 years old. If your year of birth is 1951-1959, take your RMD at 73 years old. If your year of birth is 1950 & earlier, take your RMD at 72 or (70 1/2 year old).
What happens if you forget to take out RMDs?
You will get hit with 25% tax of the amount that was not taken out. (IRC 4979). This percentage could be lowed to 10%, if a timely tax return is filed.
What happens if the RMD was missed on the year of death?
Taxpayer an take the RMDs before death. Beneficiaries can take RMDs after death of taxpayer. (Allocation of RMDS does not have to match the allocation to the beneficiaries.) You can avoid penalty if corrected within the calendar following taxpayer’s death.
2024 updates to Secure Act 2.0.
Inherited retirement plans.
RMD requirements have been waived for 2024. RMDs from inherited IRA plans must be taken in 2025.
Roth 401Ks are no longer required to take RMDs starting in 2024.
BOI back in effect.
Right before Christmas of 2024, I was telling clients to pause on Corporate Transparency Act due to a court case called Texas Top Cop Shop. Now as of 12/23/24, US Court of Appeals in the 5th Circuit has lifted the nationwide preliminary injunction that halted Corporate Transparency Act. So Yes! If you have registered a corporation or LLC, you do need to go to FINCEN website and register your Beneficial Ownership Information.
Natural Disasters.
If your home was declared as natural disaster area by IRS in 2024, please review your home state information and notify your tax preparer to claim for tax relief.