As tax time approaches, here’s what to expect when filing in 2023 – St George News

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ST. GEORGE-The Internal Revenue Service encouraged taxpayers to take important steps this month to help them file their 2022 federal income tax returns.

The IRS has issued its second in a series of reminders to help taxpayers prepare for the upcoming tax filing season. An updated “Get Ready” page, available on IRS.gov, outlines steps taxpayers can take now to make filing taxes easier in 2023.

Here’s what’s new and some key things taxpayers should consider before filing next year.

Modified reporting rules for Form 1099-K

Taxpayers should receive Form 1099-K, Payment Card and Third-Party Network Transactions, by January 31, 2023, if they received payments from third parties during the 2022 tax year for property and services over $600.

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There is no change to income taxation. All income, including that from part-time work, side jobs or the sale of goods, remains taxable. Taxpayers must report all income on their tax return, unless excluded by law, whether they receive a Form 1099-K, Form 1099-NEC, self-employed compensation, or other information return.

Prior to 2022, Form 1099-K was issued for third-party network transactions only if the total number of transactions exceeded 200 for the year and the total amount of those transactions exceeded $20,000. The American Rescue Plan Act of 2021 lowered the reporting threshold for third-party networks that process payments for those doing business.

Now, a single transaction over $600 may require the third-party platform to issue a 1099-K. Money received through third-party payment networks from friends and relatives as personal gifts or reimbursements of personal expenses is not taxable.

The IRS is warning people in this category who may be receiving a Form 1099 for the first time — especially “early filers” who typically file in January or early February — to be cautious. and ensure they have all of their key income documents before submitting a tax return.

A little extra caution could save people extra time and effort in filing an amended tax return. And if they have untaxed income on a Form 1099 that isn’t reflected on the tax return they initially file, that could mean they need to submit a tax payment with an amended tax return.

If the information is incorrect on the 1099-K, taxpayers should immediately contact the payer, whose name appears in the upper left corner of the form. The IRS can’t fix it.

Some tax credits return to 2019 levels

This means that affected taxpayers are likely to receive a significantly lower refund than in the previous tax year. The changes include amounts for the Child Tax Credit, Earned Income Tax Credit, and Child Care and Dependent Care Credit.

  • Those who received $3,600 per dependent in 2021 for the Child Tax Credit will, if eligible, receive $2,000 for the 2022 tax year.
  • For the earned income tax credit, eligible taxpayers without children who received approximately $1,500 in 2021 will now receive $500 in 2022.
  • The child and dependent care credit is reduced to a maximum of $2,100 in 2022 from $8,000 in 2021.

Visit credits and deductions for more details.

No higher charitable deductions

During COVID, taxpayers could claim a tax deduction of up to $600 for charitable donations on their tax returns. However, in 2022, those who take a standard deduction cannot take a higher deduction for charitable donations.

More people may be eligible for the premium tax credit

For the 2022 tax year, taxpayers may still benefit from a temporary expansion of eligibility for the premium tax credit.

Modification of the eligibility rules for claiming a tax credit for clean vehicles

Review the changes made by the Cut Inflation Act of 2022 to qualify for a clean vehicle credit.

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Avoid repayment delays and understand the repayment schedule

Many different factors can affect the timing of a refund after the IRS receives a return. Although the IRS issues most refunds in less than 21 days, the IRS warns taxpayers not to count on receiving a 2022 federal tax refund by a certain date, especially when making purchases. important or bill payments.

Some returns may require additional review and may take longer to process if the IRS systems detect a possible error, the return is missing information, or if there is suspected identity theft or fraud.

Also, the IRS cannot issue refunds for people claiming the earned income tax credit or the additional child tax credit until mid-February. The law requires the IRS to withhold the entire refund – not just the portion associated with the earned income tax credit or the ACTC.

The last quarterly payment for 2022 is 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 Withholding Tax Estimator on IRS.gov can help employees determine whether to consider an additional tax payment to avoid an unexpected tax bill when filing.

Gather 2022 tax documents

Taxpayers should develop a record-keeping system – electronic or paper – that keeps important information in one place. This includes year-end documents such as W-2 forms from employers, Form 1099s from banks or other payers, Form 1099-K from third-party payment networks, Form 1099-NEC for non-employees, Form 1099-MISC for miscellaneous income or Form 1099-INT if you received interest, and records documenting all digital asset transactions.

Ensuring their tax records are complete before filing helps taxpayers avoid errors that lead to processing delays. When they have all their documents, taxpayers are in the best position to file an accurate return and avoid processing or refund delays or letters from the IRS.

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Login to online account

An IRS online account allows taxpayers to securely access their personal tax information, including tax return transcripts, payment history, certain notices, prior year adjusted gross income, and information of proxy. Registrants can log in to check if their name and address are correct. They must notify the IRS if their address has changed. They must notify the Social Security Administration of a legal name change to avoid a delay in processing their tax return.

Get funds to speed up repayments with direct deposit

The fastest way to get a tax refund is to file electronically and choose direct deposit. Direct deposit is faster than waiting for a paper check in the mail. It also avoids the possibility of a refund check being lost, stolen, or returned to the IRS as undeliverable.

Don’t have a bank account? Learn how to open an account at an FDIC-insured bank or through the National Credit Union Locator tool. Veterans should visit the Veterans Benefits Banking Program to access financial services from participating banks.

Prepaid debit cards or mobile apps may allow direct deposit of tax refunds. They must be associated with 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.

Favor resources

Taxpayers can download Get Ready to File, or Year-Round Tax Planning is for Everyone, for more information to help them prepare to file.

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