Tax time: What’s new for tax season 2023
It’s tax season again! With the pandemic-era tax changes coming to an end, and new rules instituted to battle inflation, there are many changes to be aware of when preparing to file your return—especially if this is your first time filing. The deadline to file is April 18th, which is a few days later than the usual April 15th deadline, but it will be here before you know it. File your taxes with confidence—below are a few things to keep in mind when filing your 2022 tax return.
Pandemic-era tax credits
Economic Impact Payments
No new Economic Impact Payments (also known as stimulus checks) were issued in 2022. This also means you will not be able to claim any Recovery Rebate Credits.
Child Tax Credit
The American Rescue Plan increased the Child Tax Credit (CTC) in 2021 and made it fully refundable. In 2022, the CTC returned to its previous nonrefundable status and was reduced to $2,000 per qualifying child. It will also once again be limited to dependents under the age of 17.
Child and Dependent Care Credit
If you pay for the care of a qualifying person in order to work, you can still receive a credit for some or all of your expenses. The IRS, however, has significantly reduced the child and dependent care credit cap for 2022—to a maximum of $2,100. In addition, the credit has reverted to its previous nonrefundable status, and the amount of employment-related expenses you can claim has been lowered to $3,000 for one qualifying person or $6,000 for two or more.
Charitable deduction changes
Another big change this year revolves around charitable deductions. For those filing 2022 tax returns, any charitable contributions must be itemized using the Schedule A form to get a deduction. That’s a big change from the last two years when the IRS offered an above-the-line deduction for contributions.
Inflation Reduction Act changes
The Inflation Reduction Act signed into law in August of last year provided a few new tax breaks that filers could take advantage of in the 2022 tax year.
Increased credit for solar energy products
The act increased the Residential Clean Energy Credit—you can now subtract 30% of the installation costs for solar heating, solar electricity (such as panels), and other solar products for the home. There is also no cap on the credit or income limitations. Additionally, the act removed the principal residence restriction, meaning homeowners who installed solar products on second or vacation homes are also eligible for the credit.
Eligibility for electric vehicle (EV) Tax Credit
Consumers who bought a new electric vehicle (EV) may be eligible to receive the Qualified Plug-in Electric Drive Motor Vehicle Credit up to a maximum of $7,500 depending on the capacity of the battery. While that credit isn’t new, those who bought the vehicle between Aug. 17, 2022 and Dec. 31, 2022, must show that the vehicle underwent final assembly in North America to qualify. This requirement doesn’t apply to vehicles purchased earlier in 2022 before the act was signed.
Income tax brackets have changed for 2022
For the 2022 tax year, income tax brackets were also raised to account for inflation. Your income bracket refers to how much tax you owe based on your adjusted gross income, which is the money you make before taxes are taken out, excluding itemized exemptions and tax deductions.
Interest on refunds
In 2022, some taxpayers received interest payments on their federal refund if they received their refund late. Refund interest payments are taxable and must be reported when filing your 2022 federal income tax return. The IRS sent Form 1099-INT to anyone who received $10 or more in interest. If you did not receive the form, you must still report your interest income earned. Check your account statement or contact your financial institution to get your interest-earning amounts.
If you were self-employed in 2022, there are various deductions you can claim on your tax return, like travel expenses or the home office deduction. The home office deduction covers mortgage interest, insurance, utilities, repairs, and depreciation. However, if you, like millions of Americans, worked remotely, you cannot claim these deductions. The Tax Cuts and Jobs Act suspended the business use of home deductions through 2025. Home office deductions are reserved for independent contractors or other self-employed individuals who regularly and exclusively use their homes to conduct business and their work. So, employees who receive a paycheck or W-2 from an employer are not eligible to claim the deduction—even if they currently work from home.
How to Stay Ahead
Last quarterly payment for 2022 is due on January 17, 2023
Taxpayers may need to consider estimated or additional tax payments due to non-wage income from unemployment, self-employment, annuity income, or even digital assets. The Tax Withholding Estimator on IRS.gov can help wage earners determine if there is a need to consider additional tax withholding to avoid an unexpected tax bill when they file next year
Gather 2022 tax documents
With the end of the month comes an influx of tax forms in the mail or your email inbox. Be on the lookout for your W-2 from employers, Forms 1099 from banks or other payers, Form 1099-K from third-party payment networks, Form 1099-NEC for nonemployee compensation, Form 1099-MISC for miscellaneous income, or Form 1099-INT if you were paid interest. Additionally, if you have health insurance through the Marketplace, you will need Form 1095.
Georgia’s Own mailed out 1099-INT to all eligible members on January 20th, 2023. Those who received less than $10 in interest will not receive a 1099-INT.
Ensuring your tax records are complete before filing helps you avoid errors that could lead to processing delays.
Get refunds faster with direct deposit
The fastest way to get a tax refund is by filing electronically and choosing direct deposit. Direct deposit is faster than waiting for a paper check in the mail. It also avoids the possibility that a refund check could be lost, stolen or returned to the IRS as undeliverable.
In need of a new checking account? Georgia’s Own has a variety of checking account options so you can be sure to find the right one for you. Plus, through the end of February, members are eligible for a $200 bonus* when opening a NEW Perks+ Checking account with online banking (new accounts only, not converted).
- Several pandemic-era tax credits returned to their previous caps, such as the Child Tax Credit and the Child and Dependent Care Credit.
- The Inflation Reduction Act implemented changes, like the increased Residential Clean Energy Credit.
- Gathering all your tax documents ahead of time can help you get the biggest refund and avoid errors that could lead to processing delays.
Remember—if your adjusted gross income (AGI) is less than $73,000 annually, you qualify to file your return for free using the IRS’s Free File Program. Additionally, Georgia’s Own members are eligible for a discount on TurboTax®** and H&R Block®.***
Once your return is accepted by the IRS, you can use Where’s My Refund to track when you’ll receive your refund. April will be here before you know it, so allow yourself plenty of time to file to ensure there are no errors. Keep these tips in mind, and tax season will be a breeze.