FINANCIAL NEWS
Tax season 2023: what has changed from the previous year?
The IRS has new information relating to the upcoming tax filing season. Here’s what’s new for taxpayers to consider before they file next year.
While there are no sweeping changes to the tax system this year, it is worth keeping abreast of what changes have been put into place so that there are no shocks for you when you get your tax return.
Changes to important dates
- 23 January: IRS begins 2023 tax season and starts accepting and processing individual 2022 tax returns.
- 27 January: Earned Income Tax Credit Awareness Day to raise awareness of valuable tax credits available to many people – including the option to use prior-year income to qualify.
- 18 April: National due date to file a 2022 tax return or request an extension and pay tax owed due to the Emancipation Day holiday in Washington, D.C.
- 16 October: Due date to file for those requesting an extension on their 2022 tax returns.
Changes to the standard deduction
The term ‘standard deduction’ is the earnings threshold below which you will not have to pay tax on your income. This either means that you can reduce your tax bill, or it could free you from income tax entirely.
The standard deduction increases in 2023 is $13,850 for single filer or married but filing separately, $20,800 for head of households and $27,700 for married taxpayers filing jointly.
Expect less refunds
The IRS has already come out and said that there will be fewer refunds sent out due to less tax breaks and federal support programmes last year compared to 2021 and 2020. As the government has chosen to wind down its pandemic-related support the amount of extra tax breaks available has shrunk.
The average refund for the last tax season was $3,176, which is nearly 14 percent more than the average for a year earlier according to IRS figures.
Changes to the Child Tax Credit
The amount of the Child Tax Credit increased for the last tax year to $3,600 as the American Rescue Plan came into effect. However, Congress failed to pass an extension and the CTC will, if parents are still eligible to file, get $2,000 for the 2022 tax year.