Get Ready for Tax Season 2023!
It’s that time of year again! Tax season is just around the corner, and it’s important to stay updated on all the changes made since last year.
From covering who can file for free, what tax breaks are being offered, and what unemployment benefits are being taxed to what exactly has changed from last year, we’ll help make filing your taxes this year a breeze! So, let’s dive in and explore!
When Are Taxes Due?
Before jumping into the changes, it’s essential to understand when exactly you need to file your taxes and when they are due. Taxes are due on April 18th, 2023. The IRS recommends that you file your taxes as soon as possible to minimize the risk of identity theft and ensure you receive any refund owed to you in a timely manner.
How Do I File My Taxes?
You have a few options for filing your taxes this year. You can choose to file them yourself online, use a tax preparation service or software package, or hire an accountant or tax advisor.
The best option for you will depend on how complex your taxes are, whether or not you’re comfortable filing them yourself, and whether or not you need help navigating the process. For example, if you own your own business, have investments or own rental property, then you may need the help of an accountant or tax advisor.
Who Can File for Free?
Good news – there are several companies that offer free tax filing options this year. This includes many major players, such as TurboTax, H&R Block, and Credit Karma. In addition, many states are offering their own free filing programs as well. So no matter where you live, chances are there’s a free option available.
According to the IRS, “Taxpayers, including active-duty military, who made $73,000 or less in 2022 will likely find an offer from a Free File provider that matches their needs. Some providers also offer free state return preparation. Taxpayers can go to the IRS Free File webpage to find the right IRS Free File offer for them.”
What Tax Breaks Are Being Offered?
The standard deductions for 2023 have changed and have been adjusted for inflation. The new deductions look like this:
- Single – $13,850
- Married Filing Jointly – $27,700
- Married Filing Separately – $13,850
- Head Of Household – $20,800
Some of the deductions you can choose to claim on your 2022 and 2023 tax returns include the following:
- Charitable Deductions: You can claim up to 60% of your adjusted gross income in charitable donations. However, the $600 deduction for non-itemizers has been discontinued.
- Medical Deductions: You can claim up to 7.5% of your adjusted gross income when it comes to medical expenses.
- Business Deductions: If you work for yourself, you can claim travel expenses, home office deductions, and even your internet bill. However, you won’t be able to claim a home office deduction if you work remotely.
- Child Tax Credit: You can receive a credit of up to $2,000 per dependent child under the age of 17.
- AOTC (American Opportunity Tax Credit): This is a partially refundable credit that allows you to claim $2,500 per student.
Are Unemployment Benefits Being Taxed?
Yes, unemployment benefits are considered taxable income and must be reported on your federal tax return. Similar to the income you would make at a job, you’ll pay taxes on any unemployment benefits you receive. However, depending on your state, you may only need to pay federal taxes on your unemployment benefits instead of having to pay state taxes.
What Has Changed Since Last Year?
Due to COVID-19-related disruptions, last year saw massive changes in how taxes were filed – this included extended deadlines, delayed refunds, and other challenges that made filing more difficult than usual.
Fortunately, this year things should be much smoother – not only have most deadlines returned to normal, but many companies have streamlined their software so that filing is easier than ever before.
However, some things have changed. For example, reporting rules have changed for taxpayers that should receive a Form 1099-K. You will need this for goods and services that exceeded $600. According to the IRS, you should be cautious to file too early if you fall in this category. Make sure you have all your key income documents, including the 1099-K form, to avoid having to file an amended tax return.
Also, it’s important to note that some tax credits will be returning to their 2019 levels, which will more than likely mean a smaller refund this year.
Here are some of the changes according to the IRS.gov website: 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 $500 in 2022.
- The Child and Dependent Care Credit return to a maximum of $2,100 in 2022 instead of $8,000 in 2021.
Visit Credits and Deductions for more details.
Conclusion for Tax Season 2023
Now that you know what’s changed since last year’s tax season and what breaks are being offered, here’s one more thing – do yourself a favor and start preparing early! Gathering all relevant documents and completing forms ahead of time will help reduce stress come April 18th, when it’s time for everyone to do their taxes!
By taking the time to research and understand all the available options, you can ensure that you’ll be taking advantage of every possible deduction and receiving any refunds due to you in a timely manner. Take a deep breath – with all the new tax rules, assistance programs, and filing options out there this year, filing your taxes doesn’t have to be a daunting task. Good luck!
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