March 24, 2023
Tax Return season is here, and you have until April 18th to get your taxes filed or request an extension. If you prepare & file taxes yourself, the IRS has some very useful information about filing this year. We have summarized them here, directly from the IRS website.
5 Steps you can take now to make tax filing easier in 2023
- Create or access your account information at IRS.gov/account
- Gather & organize your tax records
- Check your Individual Tax Identification Number (ITIN)
- Make sure you've withheld enough tax
- Get direct deposit set up
What's new when you file in 2023
More taxpayers may receive a Form 1099-K
The American Rescue Plan of 2021 changed the reporting threshold for third-party settlement organizations (TPSOs), including payment apps and online third party settlement organizations. The new threshold requires reporting of transactions in excess of $600 per year; changed from the previous threshold of an excess of 200 transactions per year and an excess of $20,000. TPSOs are required to report payments for goods and services.
However, money received through third party payment networks from friends and relatives as personal gifts or reimbursements for personal expenses is not taxable.
2022 changes that may affect your tax refund
No additional stimulus payments. Unlike 2020 and 2021, there were no new stimulus payments for 2022 so taxpayers should not expect to get an additional payment.
Some tax credits return to 2019 levels. This means that affected taxpayers will likely receive a significantly smaller refund compared with the previous tax year. Changes include amounts for the Child Tax Credit (CTC), Earned Income Tax Credit (EITC) and Child and Dependent Care Credit.
- Those who got $3,600 per dependent in 2021 for the CTC will, if eligible, get $2,000 for the 2022 tax year.
- For the EITC, eligible taxpayers with no children who received roughly $1,500 in 2021 will now get $560 in 2022.
- The Child and Dependent Care Credit returns to a maximum of $2,100 in 2022 instead of $8,000 in 2021.
No above-the-line charitable deductions. Taxpayers who don’t itemize and who take the standard deduction, won’t be able to deduct their $600 charitable contributions.
Eligibility rules changed to claim a tax credit for clean vehicles. If you bought a new, qualified plug-in electric vehicle (EV) in 2022 or before, you may be eligible for a clean vehicle tax credit up to $7,500 under Internal Revenue Code Section 30D.
Avoid refund delays and understand refund timing
Many different factors can affect the timing of your refund after the IRS receives your return. Although the IRS issues most refunds in less than 21 days, the IRS cautions taxpayers not to rely on receiving a refund by a certain date, especially when making major purchases or paying bills.
What does this all mean?
Your post-COVID tax return may not be as much as it has been in the last couple of years. If you're confident about filing your own taxes, you can do it for free on the IRS's website, via Free File Fillable Forms. If this seems a bit too complicated, ask a friend or family member for a referral of a trusted tax preparer.
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