For astute taxpayers, income taxes are a year-round experience than a single event. As the deadline for filing approaches, taxpayers can begin preparing now to receive the best potential tax rebate.
Mark Steber, Jackson Hewitt’s chief tax information officer, joins GOBankingRates to discuss the impact of inflation on tax brackets and emerging tax trends. Steber also provides practical advice so taxpayers can earn a bigger tax rebate.
READ ALSO: Child Tax Credit: A Guide for New Parents
Annual Inflation Changes
The IRS announced on Oct. 18, 2022, that for the tax year 2023, there would be annual inflation changes for more than 60 tax provisions. This includes tax rate schedules, energy credit changes, and a higher maximum Earned Income Tax Credit amount — $7,430 for qualifying taxpayers with three or more qualifying children. All of these are available on IRS.gov, as well as notes on unaffected items.
New Rules for Form 1099-K
A significant tax law change in April 2022 affected tax rebates for those who use third-party apps, such as Venmo and PayPal. They will receive Form 1099-K if they obtain more than $600 on these platforms. Third-party billing systems and process payments will need to issue Form 1099-K once the maximum amount earned through the vendor exceeds $600.
Changes in Child Tax Credit
The child tax credit may cause some confusion during the 2023 tax season. Steber mentioned that the rebate would be reduced by $1,000 for children aged 6 and up and $1,600 for children under 6.
Preparing for Tax Season
Taxpayers can begin preparing as early as now through these methods:
Steber recommends organizing your tax-related document into four categories:
- Income Items
- Life Changes
Look for Ways to Reduce Your Taxable Income
Contribute a bigger amount to your retirement accounts. To make 2022 IRA contributions, Steber mentioned that you have until April 17, 2023 for those with IRA.
Find a Tax Professional Now
If you have questions, don’t wait until the last minute to consult a professional. Steber suggests seeking a tax professional who can now provide tips and insight to get bigger tax rebates.
READ ALSO: IRS 2023 Tax Filing Season: When Will You Receive Your Tax Refund?