It’s that time of the year. Prepare your W-2s, 1099s, or any other form you’ve received in the mail. Tax season starts on January 23 and is expected to end on April 18, 3 days later than the usual tax schedule. Whether you’re a pro at filing your taxes on your own or you go to a trusted third party, here are some things to consider when starting the process this year:
To curb the influx of questions and ensure that filing Americans can successfully go through the process, the IRS added an additional 5,000 customer service employees this season. Make sure you have this number at hand if any questions arise 1-800-829-1040. Don’t forget to make use of the tools provided on their website.
Check the tax credits and deductions that are live and part of the Inflation Reduction Act of 2022. Although this is a 10-year plan and provisions will be implemented slowly, one provision, which changes the eligibility rules to claim a tax credit for clean vehicles, took effect as soon as the law was signed. This new legislation will affect individuals, businesses, tax-exempt, and government entities.
Get familiar with the Interactive Tax Assistant (ITA) service on the IRS page. This tool is basically an interactive FAQ or interview tool where you can get your basic tax questions answered quickly after answering a few questions about yourself. The process usually takes 15 minutes and can be a great tool whether you have specific questions or want to feel less overwhelmed and confused this tax season.
Before you start filling, make sure you have all of the forms and information necessary so your process is seamless and your refund does not get stuck for weeks or months. Consider your employment forms (W-2), your independent contractor forms (1099), Health Insurance forms (1095 A form), and retirement plan forms such as the 1099R. Ask your tax preparer about your eligibility for the Refundable Savers Tax Credit.
If you’re a student who went to school at least part-time or took courses, make sure you get a 1098T form. With this form you could get access to some of the last few refundable tax credits still standing, The American Opportunity tax credit and the Lifetime Learning credit. Use the IRS information tools or talk to your tax preparer so you don’t miss out on these opportunities!
Rules on taxable payments on third-party apps such as Venmo, Paypal, CashApp, and Facebook Market have changed. According to the IRS’s “Get Ready” page: Taxpayers should receive Form 1099-K, Payment Card, and Third Party Network Transactions, by January 31, 2023, if they received third-party payments in the tax year 2022 for goods and services that exceeded $600. The good news is, money received through third-party payment networks from friends and relatives as personal gifts or reimbursements for personal expenses is not taxable.
Lastly, some tax credits that had been amended during the pandemic to provide more cushion to taxpayers are going back to 2019 levels. Some of the changes outlined by the IRS 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.
Be prepared and file confidently using these tools and tips. Remember to communicate clearly with your tax preparer or use the IRS's enhanced tools to file on your own. The process never seems to get simpler, but starting a little earlier and knowing the resources available can make a huge difference.
Credits and Deductions Under the Inflation Reduction Act of 2022 https://www.irs.gov/credits-and-deductions-under-the-inflation-reduction-act-of-2022
Interactive Tax Assistant (ITA) https://www.irs.gov/help/ita
Tax Season 2023: What You Need to Know (and Looking Ahead to 2024) https://www.ramseysolutions.com/taxes/tax-season-what-you-need-to-know
Get Ready for taxes: What's new and what to consider when filing in 2023 https://www.irs.gov/newsroom/get-ready-for-taxes-whats-new-and-what-to-consider-when-filing-in-2023
IRS Announces The Start Of The 2023 Tax Season — Here Are The Key Deadlines And Changes https://www.forbes.com/sites/anthonytellez/2023/01/12/irs-announces-the-start-of-the-2023-tax-season---here-are-the-key-deadlines-and-changes/?sh=b2b2e0834ee2