Understanding tax change highlights are always important and crucial for taxpayers. In this year, some new things comprise a rise in standard deductions along with adjusted tax brackets and some prime alterations to certain common tax deductions and credits.
In today’s article, We will talk in detail about such changes along with a few more. But before we begin to learn about the highlights of the tax changes for 2022-23, here are a few things one must know beforehand:
- Tax Filing Deadline: For all Federal Payments and Tax Returns, April 18th, 2023 is the deadline.
- Extension Deadline: In case you request for an Extension, October 16th, 2023 is the deadline.
- Standard Deduction Rise: For Single Filers, The standard deduction rose to USD 12950 and for Married Couples Filing Jointly, It rose to USD 25900 for 2022.
- Tax Brackets Rise: To Account for Inflation, Income Tax Brackets increases in 2022.
It is never too early to begin planning for the next year, so here are two important things for the 2024 season that you should be aware of:
- Tax Brackets Increase: The income tax brackets will also shoot up in 2023.
- Standard Deduction Rise: The standard deduction increases to USD 13859 for single filers in 2023, While for married couples filing jointly, it increases to USD 27700.
Canadian Tax Change Highlights for 2022-2023
Canadian taxpayers need to be aware of them when submitting Income Tax Returns in 2023 and beyond. In this article, You will get an insight into the sectors where tax changes have taken place.
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When Shall I File my Taxes?
The 2023 tax season begins from January end. Hence, a W-2 Form from your particular employer must be in your mailbox at that time. Since several employers use a digital payroll system for the purpose of direct deposit, you may also locate your W-2 online. Those who freelance should request a 1099 Form from their respective clients, without fail.
Here are some additional tax forms that you might require:
- Investment Income Statements
- Mortgage Interest Statements
- Charitable Contribution Statements
Now is also a good time to accumulate the receipts in case you wish to itemize your deductions so that by April end you are not confused or perplexed in regard to your tax payments.
After you have such forms accumulated and organized, you will be able to file your taxes. In case you are unsure of the things you require to file taxes, you need to talk to a tax consultant or someone who has expertise in handling difficult tax situations.
United States Tax Change Highlights for 2022-2023
Here are the key highlights of the United States tax change for 2022-23:
Due Date of Return
File your 2022 Form 1040 or 1040-SR by April 8th, 2023. The due date has been moved further due to the Emancipation Day holiday in 5the particular District of Columbia. It is applicable even if you do not stay in the District of Columbia.
Filing Status Name Alteration for a Qualifying Widower
The filing status Qualifying Widower has been named again as Qualifying Surviving Spouse. The rules for the filing status is the same.
Amounts for Earned Income Tax Credit (EITC), Child Tax Credit (CTC), and Child and Dependent Care Credit shift back to the last levels
Changes to such credits done by the ARP (American Rescue Plan Act of 2021) were not moved further into 2022. It means the taxpayers who qualify for such credits may get a small refund compared to last year.
For Instance:
If you get USD 3500 for every dependent in the year 2021 for CTC, you will receive USD 21 in 2022.
In case you are a taxpayer who has no children and acquired USD 2000 in 2021, in 2022 you will get only USD 1000. It is imperative that you be under the age of 25 but not more than 65 age to claim the particular EITC minus any qualifying child.
The Child and Dependent care credit gets back to a maximum of USD 2100 in 2020, right below 8000
Form 1099-K Reporting Requirements
Form 1099-k is deployed with the help of 3rd party settlement organizations and credit card companies in order to report for the payments done to you in the form of an earning. For instance, you may get Form-1099 in case your business income is via a PayPal account. Previously, this would arise when you have made USD 20000 or more and had 200 transactions.
In early December 2022, the IRS declared that Form 1099-K will now be required to be generated when the payments go beyond USD 600 for several transactions. However, it has not to be reported widely that on Dec. 23 the IRS declared that the year 2022 will be a transitional year with Form 1099-K only needed where gross payments go beyond USD 20000 and there are extra 200 transactions.
Even though you need to report all income on your tax return if it is not excluded by law, regardless you get Form-1099 K or not. But, if you do receive a 1099-k, you must see it properly to ensure it is right. If you consider it to be wrong, you must get in touch with Form 1099-k and have it rectified as quickly as possible.
No Above-the-line Charitable Deductions anymore
During Covid, Taxpayers could accept charitable donation deductions on their particular tax returns of around USD 3600. However, you will be required to itemize deductions on your particular return to receive a tax break for the donations in 2022.
You will generally only do it if the itemized deductions are more than the standard deductions and that is not common.
Standard Deduction Amount Amplified
For the year 2022, the standard deduction amount has been amplified for all tax filers. The fresh amounts are:
- Married or Single filing individually – USD 12950
- Qualifying Surviving Spouse or Married Filing Jointly – USD 25900
- Head of a Household – USD 19400
Clean Vehicle Credit Rule Changes
There have been some alterations done to the rules in order to qualify for a Clean Vehicle Credit.
2023 Inflation Adjustments
The IRS manages some amounts to inflation every year and for the year 2023, the amounts will be going up a lot higher. It means that taxpayers cannot see less tax owing or bigger refunds when in 2024 they file their returns for 2023.
Tax Credits and Deductions to Consider for the Tax Season 2023 and 2024
Tax deductions assist in lowering the income amount that can in fact be taxed. A few deductions are only accessible in case your deductions are itemized while others are available still in case you wish to take the standard deduction.
Tax Credits are simply dollar amounts that are deducted from the tax bill and are usually two types- refundable and nonrefundable.
Here are some credits and deductions you may be able to claim on your particular 2022 or 2023 tax return:
- Medical Deductions
- Earned Income Tax Credit (EITC)
- Child and Dependent Care Credit
- Charitable Deductions
- Business Deductions
- Child Tax Credit
- Education Credits
Hope this article was helpful to you to understand the key highlights for the 2022-23 tax change in the US. Still, if you get confused or have some concerning queries, feel free to reach out to our team of tax experts.
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