Preparing for the 2023 Tax Season

The holiday season is upon us, and tax season will be here before you know it. Filing your tax returns is not exactly a festive time; but, just like the holidays, the season will be less stressful if you’re prepared. Even though 2022 isn’t over yet, preparing now for the 2023 tax season will reduce the stress of meeting the April 15th deadline. Plus, you’ll have time to review your situation for tax saving strategies that could still be available before year-end, such as contributing to a retirement plan.

Whether you prepare and file your own tax returns or engage a tax professional, these three tips will help you prepare for the 2023 tax season:

  1. Inflation Reduction Act

The Inflation Reduction Act covers several new and reinstated tax laws that affect individuals and businesses. One provision allows eligible taxpayers to claim a tax credit for purchasing a new qualifying electric vehicle after August 16, 2022. The Department of Energy has provided a list of Model Year 2022 and early Model Year 2023 electric vehicles that may meet the North America final assembly requirement. More details about clean vehicles and other tax provisions will be available in coming months.

 

  1. Tax Estimates and Withholdings

Did you owe a lot when filing your 2021 returns, or did you get a big refund? An IRS Paycheck Checkup is an online tool to make sure that your withholdings will cover your anticipated tax liability https://www.irs.gov/paycheck-checkup.Taxpayers with investment, self-employment or other non-wage income can check if they need to make a larger or smaller quarterly estimated tax payment by January 15th at https://www.irs.gov/businesses/small-businesses-self-employed/estimated-taxes.

  1. Organize Tax Documents

Use your 2021 income tax return to identify documents that you’ll need to accumulate in preparation for next tax season. Save the charitable donation letters, real estate tax bills, and other applicable documents in an electronic or physical folder. Add your 1099s, W-2s, and other year-end statements when they are emailed or snail mailed to you. If a life event happened in 2022, like buying a home, starting a business, or changing your marital status, start accumulating the documents you’ll need to address the tax impacts.

Follow these three tips to be prepared for the 2023 tax season. Bonus – the IRS shares updated information on its website and on social media for people to prepare for the 2022 return they will file next year. Check out their latest updates at https://www.irs.gov/newsroom/help-for-taxpayers-and-tax-professionals.