If you are a numbers person then this is the blog for you! The IRS just released the new standard deduction amounts and income tax brackets for the 2024 tax year that will be used when you file your taxes by April 15 of 2025. How exciting!
Why does a divorce mediator or people getting divorced at any point in 2024 care about this? During the divorce mediation process, it benefits both parties getting divorced to make smart financial decisions. Divorcing couples want to keep more money in their own pockets rather than pay it to Uncle Sam in taxes because of the choices they make pursuant to their divorce. These new amounts may affect your decision to take the standard deduction or to itemize your tax deductions. You can find more detailed information about filing taxes after a divorce or separation directly from the horse’s mouth- the IRS.
So, numbers person, here are the new parameters for standard deductions:
For individuals and married people filing separately, the new federal standard deduction will increase to $14,600, up from $13,850 in 2023.
For married couples filing jointly, the standard deduction will increase to $29,200, up from $27,700.
For people who file as Head of Household, the standard deduction will increase to $21,900, up from $20,800.
But wait, there is more. When calculating child support, you need to decide who is claiming the children for tax purposes (a tax credit) and what is your status (Single or Head of Household). When computing child support during the divorce mediation process, taxable income is used. And, there are seven tax brackets to determine taxable income.
These brackets establish the rate at which your income is incrementally taxed. The parentheses represent the amount for married couples filing jointly. For 2024 here they are:
10%- Income up to $11,600 ($23,200 for married couples filing jointly)
12%- Income over $11,600 ($23,200)
22%- Income over $47,150 ($94,300)
24%- Income over $100,525 ($201,050)
32%- Income over $191,950 ($383,900)
35%- Income over $243,725 ($487,450)
37%- Income over $609,350 ($731,200)
These amounts are your taxable income. Taxable income takes into account the tax deductions you take (401(k), charitable donations, etc.) In plain English, the first $11,600 of your yearly gross taxable income is taxed at 10%. Your income of $11,600-$47,150 is taxed at a rate of 12% and so on and so on. Your entire salary is not taxed at the highest rate, only the portion that falls into that bracket. And hopefully not all of your salary is your taxable income because you qualify for various tax breaks. Lots to think about. Great information if you are a numbers person.
For more information on divorce and divorce mediation, please contact Frances Nicotra, Esq. at Westfield Mediation, LLC at the Law Offices Of Frances Nicotra, Esq. 201.963.9423. View our website at https://fnesqlaw.com or schedule a virtual consultation here
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