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2023 brought with it a unique set of challenges, changes, and opportunities. As we enter tax season, we want to make sure you’re prepared. Here’s what you need to know before you file.
Dates to Know
Filing Deadline: Filing can take place from January 29 through April 15, 2024.
Extension Deadline: Make sure you file for an extension by April 15, 2024. Remember, if you ask for an extension, you must file by October 15, 2024.
Refunds
While there’s no guarantee when your refund will come through, the IRS says that filing electronically and choosing direct deposit as your payment method may speed up the process. If you received Earned Income Tax Credit or Additional Child Tax Credit, the law states that your refund cannot be processed until mid-February. The IRS expects most EITC/ACTC-related refunds to be available in taxpayer accounts by February 27 if they choose direct deposit.
2023 Tax Brackets
According to the IRS, the highest tax rate will be 37% for individual single taxpayers whose income is above $578,126. For married couples that file together, this number will go up to $693,751. If you’re married but filing separately, it will be $346,876. Finally, the Head of Household will be taxed 37% at an income of $578,101.
Due to inflation, the cost of everyday items has grown more expensive, increasing the cost of living. The IRS works with the overall cost of living and adjusts tax brackets to reflect what that looks like for individuals and families alike.
2023 Deductions
Standard: Remember that a standard deduction is one where you have not made any itemized deductions and are just working with the part of your income that is non-taxable. For 2023, this will be $13,850 for single filers and $27,700 for married couples filing together. These numbers have increased from 2022 when single taxpayers saw a standard deduction of $12,950 and married joint filers were at $25,900.
Itemized: Itemizing your deductions takes more time and effort but may be beneficial if you end up with more than a standard deduction will give you. If you aren’t sure what’s best for you, we recommend reaching out to a tax professional to help you decide. If you do want to itemize your deductions, here are some things you may be able to add to that list:
- Health insurance
- Mortgage interest
- Medical bills
- Student loan interest
- Educational bills such as tuition
- Donations to charities and non-profits
- State taxes
- Local taxes
- Home improvement (energy saving)
- Electric car credit
- Business expenses
- HSA (Health Savings Account) contributions
It’s important to note this is a condensed list and there are limits from the IRS on any itemized deductions. As we stated above, the best bet is to speak to an accountant or tax professional with any concerns.
What’s New?
The tax credit that will have the biggest impact is the Child Tax Credit. You could get up to $2,000 per child, with $1,600 being potentially refundable through the additional child tax credit.
File for Free: The IRS is piloting a new program this year that aims to help Americans file their taxes directly to the government for free. Called Direct File, the pilot will only be open to people who lived in these states in 2023: Arizona, California, Florida, Massachusetts, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington, and Wyoming. Click here to learn more.
If you are not eligible for the pilot, you can still file your taxes for free with IRS Free File. You must make less than $79,000 a year. Click here to learn more about Free File.
No matter, if you’re single, married, doing a standard deduction, or itemizing, making sure your taxes are correct, is crucial. When in doubt, hire a professional; it just may help you get more out of your tax return this year!
Please remember this article is just a guideline and Churchill Mortgage does not give any tax advice. Now, if you’re hoping to buy or refinance in 2024 and are looking for home loan advice, we're here to help! Click here to connect with a Home Loan Specialist.
