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If you’re getting ready to file your 2023 taxes, first pause and take a look at the following updates. Remember, if you have any questions about your taxes, you can get in touch with us at any time. Here’s what you need to know to navigate the 2023 tax changes and updates effectively:

2023 Tax Season Changes & Updates to Be Aware Of:

1. Tax Bracket Adjustments:

The IRS has adjusted the tax brackets for inflation. For example, single filers with incomes up to $11,000 fall into the 10% bracket, while those earning more than $578,125 are in the 37% bracket. Similar adjustments apply to other filing statuses like Married Filing Jointly, Married Filing Separately, and Head of Household.

2. Increased Standard Deductions:

The standard deductions for various filing statuses have increased. For 2023, single filers and married filing separately get a standard deduction of $13,850. Heads of households will have a standard deduction of $20,800, while married filing jointly and surviving spouses will receive a standard deduction of $27,700.

3. New 1099-K Requirements:

There’s a significant update in the 1099-K reporting requirements. For the tax year 2023 and prior, third-party payment networks must issue a Form 1099-K for individuals or businesses receiving over $20,000 in gross payments and over 200 transactions. Starting in 2024, the threshold will change to more than $5,000 in gross payments with any number of transactions.

4. Changes to Tax Credits and Deductions:

Various tax credits and deductions have seen changes. For instance, the Child Tax Credit’s refundable portion increased to $1,600, and the Premium Tax Credit has been extended through 2025. The business meals deduction is now limited to 50%, and the Earned Income Tax Credit investment income limit is increased to $11,000.

5. Energy-Related Tax Credits:

There have been expansions in energy tax credits. The Energy-Efficient Home Improvement Credit allows homeowners to claim 30% of qualifying expenses, up to $1,200 annually. Additionally, the Clean Vehicle Credit, including a new provision for Used Electric Vehicles, and Commercial Clean Vehicles Credit, have been updated.

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6. 2023 Tax Changes for Retirement Accounts:

The age for required minimum distributions (RMDs) from retirement accounts is now 73 starting in 2023, increasing to 75 for those born in 1960 or later. The excise tax rate for failing to take RMDs has been lowered from 50% to 25%, with a possibility of further reduction to 10% if the RMD is fulfilled within two years. (source)

7. Refund Delays and Timing for Taxes:

Be cautious about refund timing. The IRS issues most refunds in less than 21 days, but some returns may take longer due to additional reviews, errors, missing information, or suspected fraud. Refunds for people claiming the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC) will not be issued before mid-February. (source)

What Do These 2023 Tax Changes Mean to Me?

If you’re filing your taxes with us, these 2023 tax changes are good to know about and understand, but we’ll take care of the heavy lifting for you. If you’re filing on your own, with or without software, make sure you know which changes will apply to you so that you can take advantage of every credit and deduction possible!

Questions About the 2023 Tax Changes?

Remember, these are just the highlights. For a comprehensive understanding and to ensure you’re fully prepared for the 2023 tax season, it’s always a good idea to consult with a tax professional here at NTRC Tax & Finance or visit the IRS website for detailed information.

Tax Updates and News From the IRS | Internal Revenue Service

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