Important Tax Information for 2023
Courtesy of our partners at Tax Rite
Here it is, our annual blog to help get you ready for the 2023 tax filing season. The IRS begins accepting and processing 2022 tax year returns on Monday, January 23, 2023, marking the start of the 2023 tax season. More than 168 million individual tax returns are expected to be filed, with the vast majority coming before the April 18 tax deadline. Of note, this year is that there are three extra days to file this year due to the calendar.
While filing your 2022 tax return promises to be just as complicated as always, there are steps that taxpayers can take right now to ensure their tax filing experience goes smoothly. Let's look at what's new for 2022 and some key items taxpayers should consider before filing.
No above-the-line charitable deductions. During COVID, taxpayers could take up to a $600 charitable donation tax deduction on their tax returns. However, in 2022, those who take a standard deduction may not take an above-the-line deduction for charitable donations.
More people may be eligible for the Premium Tax Credit. For the tax year 2022, taxpayers may still qualify for temporarily expanded eligibility for the premium tax credit. Please call if you want more information about this topic.
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.
Refunds may be smaller in 2023. Taxpayers will not receive an additional stimulus payment with a 2023 tax refund because there were no Economic Impact Payments for 2022. In addition, taxpayers who do not itemize and take the standard deduction won't be able to deduct their charitable contributions.
Eligibility rules changed to claim a tax credit for clean vehicles. There are several changes taxpayers should be aware of, such as the tax credit is generally available only for qualifying electric vehicles for which final assembly occurred in North America (final assembly requirement) and a transition rule for vehicles purchased before August 16, 2022. Taxpayers who want to take advantage of this tax credit should call the office for assistance in determining eligibility..
Gather 2022 Tax Documents
The best way to prepare for tax filing is to gather important tax documents - either electronic or paper - and keep them in one place. These documents include but are not limited to: Forms W-2 from employers, Forms 1099 from banks or other payers, Form 1099-K from third-party payment networks, Form 1099-NEC for non-employee compensation, Form 1099-MISC for miscellaneous income, or Form 1099-INT if you were paid interest, as well as records documenting all digital asset transactions.
Typically, year-end forms arrive by mail or are available online mid-to-late January. Taxpayers should carefully review each income statement for accuracy and contact the issuer to correct information that needs to be updated.
Ensuring their tax records are complete before filing helps taxpayers avoid errors that lead to processing delays. When they have all their documentation, taxpayers can file an accurate return and avoid processing or refund delays or IRS letters.
Avoid Refund Delays and Understand Refund Timing
Many different factors can affect the timing of a refund after the IRS receives a return. Although the IRS generally issues most refunds in less than 21 days, taxpayers should not rely on receiving a 2022 federal tax refund by a certain date. As such, making major purchases or paying bills is not wise until the refund is received. Some returns may require additional review and may take longer to process if IRS systems detect a possible error, the return is missing information, or there is suspected identity theft or fraud.
Use Direct Deposit for Faster Refunds
The fastest way to get a tax refund is by filing electronically and choosing direct deposit. Direct deposit is quicker than waiting for a paper check in the mail. It also avoids the possibility that a refund check could be lost, stolen, or returned to the IRS as undeliverable.
Prepaid debit cards or mobile apps may allow direct deposit of tax refunds. They must have routing and account numbers that can be entered on a tax return. Taxpayers can check with the mobile app provider or financial institution to confirm which numbers to use.
Last Quarterly Payment for 2022 Due January 17, 2023
Taxpayers may need to consider estimated or additional tax payments due to non-wage income from unemployment, self-employment, annuity income, or even digital assets. The Tax Withholding Estimator on IRS.gov can help wage earners determine if they need to consider an additional tax payment to avoid an unexpected tax bill when they file.
Get Help From a Tax Professional
Filing taxes is inevitable for most people, and with tax law becoming more complex with every passing year, there is no better time to get ready and get advice than right now. This is why the FREE Tax Preparation & Advice is a very popular benefit included with select plans from Legal Club.
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Any accounting or tax advice contained in this communication is not intended as a thorough, in-depth analysis of specific issues, nor a substitute for a formal opinion, nor is it sufficient to avoid tax-related penalties. All Family Protection Plan products from Legal Club contain a Free Tax Preparation and Advice benefit. To learn more about the plans offered by Legal Club, browse this website or call us at 800-305-6816.
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