Get Ready For Taxes: What’s New And What To Consider When Filing In 2023
When you hear the word “taxes,” it might not sound like the most fun topic to tackle, but it’s important. The Internal Revenue Service (IRS) wants you to prepare now so that you’ll be ready when tax season arrives.
So, here’s what’s new and what to consider when filing your 2023 taxes.
The IRS has created a “Get Ready” page to help you stay organized and get all your ducks in a row. On this page, you’ll find a checklist of important steps you should take before filing your 2022 taxes.
Take the time to look over this page, and you’ll be ahead of the game when the filing time comes.
Reporting rules changed for Form 1099-K:
Taxpayers who have made at least $600 in payments for goods and services in the tax year of 2022 via third-party networks or payment cards should be on the lookout for Form 1099-K by January 31, 2023.
Taxpayers are legally obligated to include all their business income in their tax returns, regardless of the form or source. This includes income from part-time work, side hustles, online sales of goods and services, or any other type of business activity. Taxpayers with income from multiple sources must combine them all in their tax returns.
The American Rescue Plan Act of 2021 has changed the reporting threshold for third-party networks processing payments for businesses. Previously, Form 1099-K was required to be issued if the total number of transactions exceeded 200 for the year and the aggregate amount of these transactions exceeded $20,000. However, the American Rescue Plan Act of 2021 has significantly lowered this threshold, making it easier for businesses to report their income. It’s almost like Uncle Sam is giving you a raise. So get ready to pocket more of your hard-earned money in 2022.
When it comes to money received through payment networks, the IRS now requires third-party platforms to issue a 1099-K form if any single transaction exceeds $600.
So if you receive a large sum from a friend or relative as a gift or reimbursement, you don’t need to worry about the IRS coming after you. All those funds are non-taxable and won’t show up on your return in any way.
As the Internal Revenue Service (IRS) reminds taxpayers, those filing a Form 1099 for the first time should be extra cautious and ensure all of their necessary documents are in hand before submitting a tax return. Early filers should double-check to confirm that the income and deductions on the tax return are accurate, including any untaxed income. Those who find discrepancies may need to file an amended tax return and submit payment for any taxes due. It may take a bit more effort, but it could end up saving time and hassle in the long run.
If you’ve received a 1099-K form with incorrect information, taxpayers should immediately contact the payer. It’s the payer’s responsibility to make sure the information on the form is correct. After all, you don’t want your tax return to get flagged because of a typo on someone else’s part.
Some tax credits return to 2019 levels:
Taxpayers who were expecting a sizable refund may be in for a surprise, as several of the tax credits are returning to levels seen in 2019. That means the amount of money you get back from the Internal Revenue Service this year could be a lot smaller than anticipated. That’s good news for Uncle Sam but not so good for taxpayers. It’s like a game of Monopoly: the bank always wins.
- The CTC for 2022 will be $2,000 for those who received $3,600 per dependent in 2021.
- The EITC for non-children will now be increased to $500 for taxpayers eligible for the deduction in 2022 who received roughly $1,500 in 2021.
- Rather than $8,000 in 2021, the maximum Child and Dependent Care Credit in 2022 will be $2,100.
No above-the-line charitable deductions:
The COVID-19 pandemic has prompted taxpayers to take advantage of the generous tax relief offered by the government in the form of a $600 deduction for charitable donations. But for those who are taking the standard deduction come 2022, there won’t be an opportunity to take a higher-than-normal deduction for those donations.
More people may be eligible for the Premium Tax Credit:
It is still possible for taxpayers to qualify for a temporary expansion of the premium tax credit for the tax year 2022.
Eligibility rules changed to claim a tax credit for clean vehicles:
To qualify for a Clean Vehicle Credit, review the changes under the Inflation Reduction Act of 2022. So if you’re trying to reduce your emissions, you may be able to get a tax break for doing so.
Avoid refund delays and understand refund timing:
When it comes to the timing of a refund after filing taxes, the Internal Revenue Service (IRS) strives to issue most refunds in less than 21 days. However, several factors can impact the timing of a refund. Tax returns may require additional review and take longer to process if the IRS systems detect an error, there is missing information, or suspected identity theft or fraud. Additionally, taxpayers claiming the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC) must wait until mid-February before their refund can be issued since, by law, the IRS must hold the entire refund until that time.
With all of this in mind, it’s important to remember that taxpayers should not rely on receiving their federal tax refund by a certain date, especially when making major purchases or paying bills. It’s best to plan ahead and take the timing of a refund into consideration when making financial decisions.:
The last quarterly payment for 2022 is due on January 17, 2023:
Taxpayers should be aware that additional tax payments may be required if they are receiving income from sources such as unemployment benefits, self-employment activity, capital gains, annuities, pensions, or digital assets.
The IRS recommends that those who have non-wage income use the Tax Withholding Estimator to estimate their taxes and compare them against the total amount of tax due. This will help taxpayers determine if they need to make estimated or additional tax payments to avoid an unexpected tax bill when they file.
Gather 2022 tax documents:
Investing in a well-organized recordkeeping system is essential for taxpayers who want to ensure that their taxes are accurate and filed on time. Keeping organized records makes it easier to complete their tax forms and helps taxpayers avoid surprises at the end of the year. It also ensures that if they ever need to go back and review their tax information, all the records will be in one place. Organized records can also minimize audit risks if taxpayers are subject to an IRS audit. So, don’t let the tax season scare you – make sure your records are in order and use them to your advantage.
Sign in to Online Account:
The IRS Online Account is a great way for taxpayers to conveniently access all of their pertinent tax information safely and securely. By logging in, taxpayers can take advantage of the many benefits, such as being able to view current and prior year tax information, check on the status of their refund, set up payment plans, and more. Even better, taxpayers can access this information at any time, day or night, from the comfort of their homes. So, the next time you need a tax break, look no further than your trusty IRS Online Account.
Get banked to speed refunds with direct deposit:
Filing your taxes electronically is the fastest and most secure way to get a tax refund. When you select direct deposit, you don’t have to worry about your refund check getting lost in the mail or, even worse, eaten by a ravenous wolf.
So save yourself time and hassle this tax season and file electronically with direct deposit. Your refund will be safely in your account before you know it.