November 10, 2023
IRS releases 2024 inflation adjustments for fringe benefits and Form W-2/1099 information reporting penalties
In Revenue Procedure 2023-34, the IRS announced the 2024 inflation adjustments that will apply to certain fringe benefits and to Form W-2/1099 information reporting penalties.
Medical Savings Account (MSA) limits go up in 2024
Summarized below are the 2024 limits that apply to MSAs under IRC Section 220(c)(2)(A).
Adoption assistance limit goes up in 2024
The limit on qualified adoption assistance (including benefits provided for special needs children) under IRC Section 137 for 2024 is $16,810, up from $15,950 in 2023.
For 2024, the amount excludable from an employee's gross income begins to phase out under IRC Section 137(b)(2)(A) for taxpayers with modified adjusted gross income of more than $252,150 and is completely phased out for taxpayers with modified adjusted gross income of $292,150 or more.
Health flexible spending arrangement (FSA) limit goes up in 2024
The 2024 annual limit on pretax contributions employees can make toward their health FSA through a cafeteria plan under IRC Section 125(i) is $3,200, up from $3,050 in 2023.
If the cafeteria plan permits the carryover of unused amounts, the maximum carryover amount is $640, up from $610 in 2023.
Transportation fringe benefits (parking and transit) limit goes up in 2024
The 2024 monthly limit on parking benefits under IRC Section 132(f)(2)(B) is $315, up from $300 in 2023.
The 2024 aggregate monthly limit for transportation in a commuter highway vehicle and any transit pass under IRC Section 132(f)(2)(A) is also $315, up from $300 in 2023.
Foreign earned income exclusion for 2024
For taxable years beginning in 2024, the foreign earned income exclusion amount under IRC Section 911(b)(2)(D)(i) is $126,500, up from $120,000 in 2023.
Reporting penalties for Forms W-2/1099 increase for tax year 2024
The penalties that apply to late or incorrect Forms W-2 is indexed each year for inflation. On the following page are the penalties that apply to late or incorrect Forms W-2 required to be furnished to employees and/or filed with the Social Security Administration for tax year 2024 (filed in 2025).
Published by NTD’s Tax Technical Knowledge Services group; Andrea Ben-Yosef, legal editor