The Internal Revenue Service (IRS) has announced that the agency will begin accepting and processing 2022 tax returns on January 23, 2023, marking the beginning of this year’s tax season.
Planning ahead is the first step to ensuring preparation of a complete and accurate tax return.
The IRS advises taxpayers to organize all tax records before filing to avoid errors that can lead to processing delays that can slow your tax refund. Spending some extra time on this step could also save individuals from potential errors that could lead to needing to file a future amended tax return or answering tax inquiries from the IRS.
Some documents you may need to file your tax return include, but are not limited to, the following:
Forms W-2 from employers
Forms 1099 from agencies issuing investment income, unemployment compensation, pension, retirement plan distributions, other income, etc.
Form 1095-A from the Health Insurance Marketplace for those claiming the Premium Tax Credit for 2022 Marketplace coverage
The filing deadline to submit 2022 tax returns or an extension of time to file will be Tuesday, April 18, 2023.
Individuals will have a few extra days to file this year, because Washington D.C. will celebrate Emancipation Day on Monday, April 17, 2023. Taxpayers requesting an extension will have until Monday, October 16, 2023 to file. However, to avoid late payment penalties, any taxes due will need to be paid by the original deadline.
Consistent with previous years, choosing to electronically file tax returns and to direct deposit any refunds remains the quickest and safest method to process returns. The IRS expects refunds to be issued in less than 21 days, though this is not always guaranteed, as various factors can affect the timing of a refund. Individuals claiming the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC) will be unable to receive refunds prior to mid-February.
The IRS also notes a handful of new items to consider when filing your 2022 tax return.
Namely, a couple COVID-19-related concessions were phased out this year. Unlike 2020 and 2021, no new stimulus payments were issued in 2022. Additionally, during COVID, individuals were allowed to claim up to $600 in charitable donation tax deductions on their tax returns while taking the standard deduction. In 2023, those taking the standard deduction will no longer be able to take a charitable donation tax deduction.
The IRS also expects more taxpayers to receive a Form 1099-K, Payment Card and Third-Party Network Transactions. You can expect to receive this form by January 31, 2023, if in 2022, you received payments from a single party of more than $600 through a third-party settlement organization (TPSO). TPSOs include payment apps such as Venmo, Cash App and PayPal and online third-party settlement organizations such as eBay and Amazon. In an effort to improve voluntary tax compliance on reporting certain payment transactions, The American Rescue Plan of 2021 changed the previous reporting threshold for TPSOs from reporting an excess of 200 transactions per year and payments in excess of $20,000 to reporting transactions more than $600 per year. On December 23, 2022, the IRS announced that the new $600 reporting threshold will be delayed a year. Although this reporting requirement is delayed, many individuals will begin receiving these forms. Money received as a gift or reimbursement of an expense, such as a share of a meal or rent, should not be reported on Form 1099-K. 1099-Ks should only be issued for payments related to the sale of goods or services.
If you have any questions, please do not hesitate to contact a member of the Schneider Downs tax department.
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