Here are the essential facts to know before you file. How to quickly receive your refund

The Internal Revenue Service (IRS), which is currently in tax filing season, has its annual meeting. warning taxpayers Be prepared for smaller refunds, without the protection of some COVID-19 tax breaks.

“Almost everything is reverting back to pre-COVID,” CPA Michele Cagan said. “Those bigger credits are all disappearing and or shrinking. It means a lot of people are gonna get smaller refunds or may end up owing when they haven’t in the past couple of years.”

Last year, the average tax refund was $3176. That’s a 14 percent increase on the previous year. Due to high inflation, households may be more affected by lower refunds. Many people rely on their refunds To make ends meet, you can pay off debts or buy major items. A Bankrate survey It was found that almost 40% of Americans consider refunds very important to their financial health.

The IRS anticipates receiving more than 168 million individual tax returns this year — underscoring the importance of filing early and preparing your information carefully. The agency started accepting 2022 tax returns on Jan. 23, and most taxpayers have until April 18 to file — three extra days than usual. While filing sooner means getting a refund sooner if you’re expecting one, experts also caution taxpayers not to rush until they’ve pulled together all the relevant tax forms.

Here’s everything you should know about preparing your return, filing your taxes and getting your refund as quickly as possible.

Here are some facts about the 2023 tax season

Experts suggest that 2023 is a year for tax resets. Many could experience refund shock if they lose their enhanced credit or other deductions that were in place for 2020 and 2021. It also means that most taxpayers will experience fewer delays and complications.

“The past three tax seasons have been seriously tough and difficult, largely because there were so many rule changes,” Cagan said. “I would expect this one to be a little bit better.”

This year, there are new tax changes. Here’s what you can expect.

Some tax credits are returning to 2019 levels

Many tax benefits received during the pandemic have expired and will no longer be available this tax filing year, including the enhanced child tax credit. Parents who received $3,600 per child during the pandemic will now get $2,000, and that’s only available for parents with children under age 17.

To help working parents cover childcare costs, the IRS expanded the child care credit. It is now limited to $2,100, instead of $8,000 for parents with multiple children. Parents with only one child may claim 35 percent of $3,000 in qualifying expenses for this tax season. This is equivalent to $1,050. Cagan explained that the income qualification has been reset to pre-pandemic levels, meaning that less filers will qualify for the credits. This tax season, parents will only be eligible for the full credit if their income is $15,000 or lower. This is a substantial drop from the $125,000 income threshold. Partially credit is still available for households earning up to $438,000

Because the government didn’t distribute stimulus checks in 2022, you won’t need to worry about receiving letters from the IRS or claiming a recovery rebate credit.

Charitable deductions should be listed

During the pandemic, taxpayers could claim an “above-the-line” deduction of up to $600 for charitable donations — even if they took a standard deduction rather than itemizing their deductions. Only itemizers can now deduct charitable contributions, and the adjusted gross income ceiling for charitable cash contributions has been raised to 60 percent.

Remote workers may be subject to double taxation in certain states

You may be taxed twice if you’re a remote worker and don’t reside in the same state as your employer. This tax year saw the expiration of many temporary relief provisions which had prevented workers from being taxed in two states. Your chances of double taxation go up if your employer is in one of five states — Connecticut, Delaware, Nebraska, New York and Pennsylvania — because of their “convenience rules.” The rule says those states can impose an income tax on wages earned while working for an employer based in one of those states, even if you’re working remotely from another state. This exception applies if your employer requires that you work in another state.

Inflation Reduction Act tax breaks

Inflation Reduction Act, which was passed into law in August, provided some new tax breaks that Americans could take advantage of.

The residential clean energy credit increased, so now you can subtract 30 percent of the installation costs for a home’s solar heating, electricity and other solar products. Credit is available to anyone with a home that has a second or vacation home. There are no income limits or cap on credit.

Another important change was the electric vehicle credit. A credit up to $7500 could be available for those who purchased an electric vehicle (EV) in 2022. If assembled in North America, electric cars purchased after August 16, 2022 are eligible for the credit.

Form 1099-K delay

A new tax rule was to be in effect in 2023. It required third-party payment systems like Venmo and PayPal to send Form 1099-K to taxpayers if they received payments exceeding $600 for goods or services. After the IRS “heard a number of concerns” from taxpayers and lawmakers about the new rule, it announced It would delay the 1099K changes in December and keep the threshold for 1099K reporting at $20,000 through 2024.

“The additional time will help reduce confusion during the upcoming 2023 tax filing season and provide more time for taxpayers to prepare and understand the new reporting requirements,” Acting IRS Commissioner Doug O’Donnell said in a statement.

When to expect your refund — and how to get it fast

Taxpayers who submit their tax returns electronically and without any errors should receive their refunds within 21 days. If they choose direct deposit, they will see the refund in 21 days. However, the exact timing is not yet known. depends on how you file Describe how you would like your refund to be paid. Here’s an estimate of what you can expect:

• One to three week for those who efile with direct deposit

• Three weeks for those who paper-file with direct deposit.

• Six to eight weeks for those who efile or paper-file with a refund check in mail.

Average tax refund per person over the past five years

Source: IRS filing season statistics 2017-2022

2023 Tax season calendar: Important dates and deadlines

• January 23: The IRS begins accepting tax returns for 2022.

• April 18, 2008 Deadline to file your 2022 tax return or request a six-month extension, though you’ll still need to pay any taxes you owe to avoid penalties or fees.

• April 19, 2009 Deadline for filing 2022 tax returns by taxpayers who reside in Maine or Massachusetts.

• May 15: Deadline to file tax return 2022 for storm victim in Alabama, California, and Georgia

• October 16 Deadline to file your 2022 tax returns if you request a six-month extension.

You can check with your state’s tax agency Find out when your state taxes will be due.

Important documents that you might need for your tax-filing checklist

• Formula W-2Your employer will supply this form. This form shows how much you received in 2022 and how much tax you withheld.

• Formula 1098This shows how much you owe on student loans or mortgages.

• Form 1099This report shows income earned as an independent contractor, or from unemployment benefits. Also, you might be eligible to receive Form 1099 INT which reports earnings on savings accounts.

• Keep records of all stocks and other investments that were sold in 2022. This includes crypto transactions and other digital assets.

• For tuition statements for higher education expenses, use Form 1098T.

Bottom line: File early — but don’t rush

The IRS says that electronically filing an error-free tax return is more important than ever this year, using either software — a tax professional or the agency’s Free File program — which is open to any individual who earns $73,000 or less a year.

“Taxpayers should aim to create the least amount of obstacles for the IRS in reviewing their tax filing,” says Tony Molina, CPA, product evangelist at Wealthfront.  “The more complications and obstacles you create for the IRS, the higher chance your return will be delayed. You should absolutely aim to file early, but not at the detriment of causing even more delays through filing errors.”

Molina suggests that you collect all the documents required by your employer and financial institutions once you have created a folder or a digital folder.

Even if your income is less than the required tax return filing fee ($12,950 single filers in 2022), it could mean that you are wasting money if you don’t file. To claim missing stimulus money or child tax credit money, individuals in this tax bracket must file a return.

To ensure that your questions are answered, consult a tax professional.

“If you leave this until the last minute, you’ll likely find yourself procrastinating even further and waiting until the last minute to file,” Molina says. “In that case, filing on April 18 will put you at the end of the IRS queue, and that’s the last place you want to be.”

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