With tax season rapidly approaching, the IRS is taking steps to remind taxpayers how they can prepare to file their 2023 federal tax return. A little advance work now can help you have the paperwork ready to file your returns quickly and accurately. As part of this effort, the IRS has created pages outlining things taxpayers can look into now to get ready. But, because we care about you and your long-term financial success, we thought we’d give you a basic rundown of some of the tips they had to share.
Update Records
Firstly: Gather, organize, and update tax records. Organizing records makes it easier to prepare a complete and accurate tax return. It helps avoid errors that can slow down refunds and may also help find overlooked deductions or tax credits. The majority of income is taxable, including unemployment compensation, refund interest, and income provided by digital assets. Taxpayers are recommended to gather Forms W-2, Wage and Tax Statement, Forms 1099-MISC, and other documents and info before filing their return. And, don’t forget to notify the IRS if you switch addresses. Also related, you should be sure to notify the Social Security Administration if you legally change your name.
Be Sure Paychecks Have Enough Tax Withheld
Using the Tax Withholding Estimator, a tool available on the IRS website, taxpayers can potentially determine the right amount of tax to have withheld from their paychecks. This tool can be beneficial if an earlier tax return resulted in tax owed or a large refund. For those who’ve had major life changes, such as getting married or divorced or welcoming a child, or for those taking on a second job, to name a few examples, this online tool can help you calculate estimated tax payments.
To change federal tax withholding, you will need to update your withholding with your employer, either online or by submitting a new Form W-4, (Employee’s Withholding Allowance Certificate). However, to make adjustments in time to affect 2023 tax withholding, it’s crucial that taxpayers act quickly. Only a few pay periods remain in the year, and payroll systems need time to make withholding changes.
Volunteer to help Taxpayers File Their Returns
The IRS is looking for people all around the country interested in becoming IRS-certified volunteers. You may want to join the Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs. This way, you can help eligible taxpayers with free tax preparation. Visit IRS.gov/volunteers to learn more and register. After you sign up, you will receive more information about attending a virtual orientation.
Utilize the IRS’ Online Tools
Everyone should make IRS.gov their first stop. Here, you can find online tools to help get the information you need. These tools are easy to use and available 24/7. Millions of people use them to help file and pay their taxes, track their refunds, find information about their accounts, and get answers to important tax questions.
Stay Up-to-Date on Changes
An important part of the tax planning process is knowing what tax bracket you’ll likely be in. There are still seven tax states, but the tax brackets for each rate have shifted slightly to account for inflation. For 2023, the following rates and changes apply:
| Tax rate | Single filers | Married couples filing jointly (or qualifying widows or widowers) |
|---|---|---|
| 10% | $0 – $11,000 | $0 – $22,000 |
| 12% | $11,001 – $41,725 | $20,001 – $89,450 |
| 22% | $44,726 – $95,375 | $89,451 – $190,750 |
| 24% | $95,376 – $182,100 | $190,751 – $364,200 |
| 32% | $182,101 – $231,250 | $364,201 – $462,500 |
| 35% | $231,251 – $578,125 | $462,501 – $693,750 |
| 37% | $578,126 + | $693,751 + |
Following an inflation adjustment, the 2023 standard deduction increases to $13,850 for single filers or couples filing separately, and to $20,800 for single heads of household who are unmarried with one or more dependents. For married couples filing jointly, meanwhile, the standard deduction rises to $27,700. Itemized deductions remain mostly the same. For most filers, taking the higher standard deduction is more practical, and saves them the hassle of keeping track of receipts. But, if you have enough tax-deductible expenses, itemizing might be worth it for the benefit.
Reach Out to a Professional
Tax professionals play an essential part in helping you navigate the nation’s current tax system. It’s important that you reach out to a qualified professional skilled in tax preparation and accurately filing tax returns. You need to find a professional you trust with your most valuable information. Taxpayers financially suffer every year because they’ve made the choice of the wrong tax return preparer. So, be sure to choose a preparer suited to you, with your best interests in mind.
Use the IRS Directory of Federal Tax Return Preparers with Credentials and Select Qualifications.
Sources: IRS.gov, Charles Schwab,
