Important Tips to Keep in Mind Before You File Your 2022 Taxes
- Author: Jenny Wolff
- Posted: 2024-04-23
Tax season is upon us. You can now begin filing your 2022 taxes with the IRS. As with every new year, there are some changes that you will want to familiarize yourself with before getting started. Before you jump into the process, here are a few tips that you should keep in mind so that you get the most out of your personal finances.
Details of 2023 Tax Season
The IRS started accepting returns from Americans on January 23. You still have plenty of time to complete this process if you are not one of the early birds to already file. The IRS is expecting over 168 million returns this year with most coming in before the official deadline.
In preparation of the flood of filings, the IRS said that it has added over 5,000 new customer service workers. The boost in staffing is a mandated component of the Inflation Reduction Act (IRA), serving to help the agency provide better service during the busy filing season. The IRS continues to steer Americans to its official website at IRS.gov for answers to many commonly asked questions.
It is important to note that this year's deadline falls on Tuesday, April 18. This is because the traditional deadline of April 15 falls on a weekend this year. This is also the deadline to submit an extension if you are unable to meet the predetermined April 18 deadline.
Those Americans living in an area that was impacted by a natural disaster in 2022 will be provided with an extension to file both individual and business taxes. This deadline is May 15.
Free Online Filing
You are in luck if you are looking for a free online filing service if you earned $73,000 or less over the year 2022. The IRS is providing its Free File program for those filers who meet this criteria. This program has been running since January 13. Those interested in taking advantage of this program can find more information at the IRS Free File website. Simply follow the prompts after logging in and you will find the best product to fit your personal needs.
New Federal EV Tax Credit
Also under the IRA, those who purchased an electric vehicle (EV) in 2022 could be eligible for a tax credit of up to $7,500. The greatest credit amount is applicable to new clean vehicles, however, you may also be eligible for a smaller tax credit if you purchased a used EV. There are some specific rules for this credit depending on your purchase date. Be sure to check the details so that you receive the greatest deduction.
Americans Bracing for Smaller Tax Returns
The IRS is already warning that tax returns in 2023 may be significantly smaller than what Americans received the previous year due to a series of changes in the tax code. One of the most significant changes is the expiration of the Child Tax Credit. That credit had been boosted in 2021 from the prior amount of $2,000 per child to $3,600 per eligible child.
While some of this credit was paid directly to Americans as advanced payments in the latter half of 2021, a good chunk of it was applied to taxes that year. This helped to naturally increase the tax return for millions of American families. Now that the expanded Child Tax Credit is gone, many families will see a much lower tax refund.
In addition to the lower child tax credit, the standard deduction also increased in 2022. This will translate to a more difficult time for some filers to claim charitable deductions as a way to lower their individual tax liability.
As the result of an inflation adjustment, the 2022 standard deduction jumped to $12,950 for single filers and married couples filing separately. Single heads of household are now at $19,400 while married couples filing jointly landed at $25,900 for a standard deduction.
While filing your taxes can seem overwhelming, the right tools can make this process go as smoothly as possible. Doing your research and understanding the new changes to the current tax code will go a long way in helping you to make the most out of what you earned in 2022.
