Tax Season Is Here: 6 Big Changes and How to Get Your Refund Faster

The tax season starts today, and the Internal Revenue Service promises to improve the service and taxpayers hope to put a challenging 2022 behind them.

The office will accept tax returns for the year 2022 from January 23 to April 18 of this year. Yes, taxpayers have three extra days this year; the usual April 15 deadline was pushed back due to the calendar.

Following a few bad seasons As taxpayers struggle to get help from the IRS, the agency announced the hiring of more than 5,000 new hotlines and additional staff to help answer calls. taxpayers’ question, funded by last summer’s Inflation Reduction Act.

Those investments may pay off this year, as there are significant changes for taxpayers. Here’s a guide to those changes and some tips on how to get you back on track as soon as possible.

Don’t Rely on Child Tax Increases and Other Sickness Programs

Most of the pandemic relief programs have ended, and as a result, some taxpayers could see smaller refunds than in previous years. or debt.

Among the provisions of the pandemic period that has ended is the extension of the child tax. For 2021, the maximum child tax credit increased from $2,000 to $3,000 for a qualifying child age 6 and over and from $2,000 to $3,600 for a qualifying child under six years, and the age limit was raised from 16 to 17. the $2,000 and the age limit will return to 16 for the 2022 tax year.

It goes back to the original steps of the child and dependent care credit and the income tax credit for low- and moderate-income earners. For 2022, the child support and maintenance credit is nonrefundable, meaning you can’t top up your refund, and it’s best up to $2,100 for two or more eligible people, compared to $8,000 and potentially refundable last year. The income tax liability varies widely based on income, filing status, and number of children; for 2021, the maximum amount owed was nearly tripled for some eligible taxpayers.

The ability to deduct $300 in charitable donations for non-material persons, or $600 for couples, is another benefit of the no longer available tax exemption period.

Strategy Making and Market Failure

While the stock market losses are painful now, some losses can help come tax time.

Last year was marked by serious market losses, and investors who sell assets that have declined in value since they bought them may be able to use those losses to their advantage. Losses can be used to offset capital gains made by selling appreciated assets. If the losses exceed the capital gains, you may be able to use the surplus to increase the $3,000 of ordinary income per year. Anything left over can be carried forward to future years.

Identify Delayed Changes

One of the proposed changes for the 2022 tax year is delayed. In December, the IRS suspended the requirement that third-party accounting firms including Venmo,


PayPal
,

and Cash App sends users and the IRS a report of transactions received over $600 on Form 1099-K. Instead, that requirement is set to go into effect for calendar year 2023, with 1099-Ks going out in early 2024.

This new requirement is intended for business income, not for personal transactions such as sharing the cost of a meal with friends. Although you may not receive a record of the business income generated through these circumstances, “you still have to report your income, even if it’s not on a tax return,” said a Eric Bronnenkant, head of tax at Betterment.

Always remember unemployment

Tech workers took on the workload last year in waves of suspension continues into the new year. If you are one of them, remember that severance pay and unemployment are taxable, as are payments for any accrued vacation or sick time. It’s not a new policy, but it may be new to you when you find it unemployed for the first time.

Do it quickly and electronically

Tax experts often encourage taxpayers to file early in the season, since it prevents criminals from filing a fraudulent form on your behalf to try to claim your refund. return. Remember, if the IRS needs to reach you, the agency will initiate communication through the US Postal Service but not through social media, text, or a threatening phone call.

Speed ​​up your return by filing online. The IRS is still working through returns from previous tax filing years.. “The system is set for electronic files,” Burnette said. “If you file your story on paper, good luck.”

IRS Free Filea service that offers free administrative preparation and filing, available to taxpayers with $73,000 or less.

Understanding How Supplements Work

Taxpayers applying for an extension will have until Monday, October 16 to file. An extension just gives you more time to give your return. If you owe the IRS any money, you must pay it by April 18.

Filing your return and paying the IRS any money owed are two separate things, says Rob Burnette, CEO and financial advisor at Outlook Financial Center in Troy. Ohio, and a tax preparer with the IRS. If you owe money but can’t afford to pay it off quickly, you can still file your return early and pay off your debt by April 18.

Letter to Elizabeth O’Brien p elizabeth.obrien@barrons.com

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