You can try to ignore it, but tax season isn’t going away. In fact, it’s getting closer with each passing hour. That’s no problem for those that prepare accordingly. It starts by knowing the deadlines and getting familiar with the process. With time and experience, you’ll be taking steps to reduce your future tax burden.
Missing dates can mean substantial financial costs, and sometimes even legal trouble. We urge you to take the time to read, learn, and prepare for tax season 2023, if only to protect yourself from those unsavory outcomes. Whether you’re looking for important dates or information on what has changed this tax season, we’ll cover everything you should know in order to be prepared this April.
Shutterstock: Coompia77Taxes 101
It’s not fun, but it isn’t as scary as people make it out to be either. In fact, the more you learn about taxes, the less scary tax season becomes. It’s been around in America since 1913, and the principles remain largely the same. United States Citizens are required, by law, to pay a portion of their annual income in taxes to the Federal government.1
How much you pay is determined in large part by your income bracket. Income brackets take a basic number like a person’s overall take-home income and apply it to a scale that determines how much they owe. Generally speaking, the more you make, the more you owe.
There are a number of ways for Americans of all income levels to qualify for additional tax credits or reduce their taxable income. Business deductions, charitable deductions, retirement savings credits, and child benefits help ease the tax burden on Americans and incentivize saving long term.
Experienced tax filers know to gather the necessary documents ahead of time, and take steps throughout the year to maximize their tax credits. Millions of Americans enlist the help of a tax professional to help ease their tax burden and their mind.
Current Dates & Deadlines
The first thing you should do each year is familiarize yourself with the season’s essential list of dates and deadlines. Grab a pen and paper and write down the following important dates and deadlines for the 2023 tax season2:
- Tax filing deadline: April 18, 2023
- Extension deadline: October 16, 2023 (for those that apply for an extension)
Missing the deadline by as little as one day could mean a costly failure-to-file penalty courtesy of the IRS.3 You’ll also be charged 5-percent of your total taxes due each month that your tax return remains unfiled. If you think you’ll need more time to file, make sure to apply for an extension as soon as possible.
New for 2023
Much of the tax process remains the same, but every year introduces a new set of changes and adjustments. The 2023 tax season is no different. Which is why you’ll find a brief overview of the changes you can expect to see below:
Income Tax Brackets
The more a taxpayer earns, the more taxes they are required to pay. This isn’t new. This year’s tax brackets are though. The IRS has made noticeable adjustments to the tax brackets in response to high inflation numbers, which could change how much you pay.
The marginal income tax rates and brackets for a single filer in 2023 are:
- 10% ($0 – $11,000)
- 12% ($11,001 – $44,725)
- 22% ($44,726 – $95,375)
- 24% ($95,376 – $182,100)
- 32% ($182,101 – $231,250)
- 35% ($231,251 – $578,125)
- 37% (Over $578,125)
Retirement Account Contribution Limits
Those looking to add more to their retirement nest egg earned a win this season. The employee deferral limit is now $22,500, with catch-up deposits for those 50 and older rising $1,000 to a total of $7,500.4
Standard Deduction Amount
The standard deduction amount is the amount you’re allowed to claim on your tax return in order to reduce your taxable income. This year that goes up too. The increase adds $900 per person, for a total of $12,950 for individuals and $25,900 for married taxpayers filing joint returns.5
What to Expect in 2024
The IRS does make changes frequently, but they provide plenty of time to react to those changes for those that stay up to date. We already know a lot about what to expect from the 2024 tax season, so we might as well work ahead.
The 2024 standard deduction is expected to increase again next year, to a total of $13,850 for single filers and $27,700 for married couples filing joint returns. The tax brackets are subject to increase for another year too.
File with Confidence
Reading, learning, and asking questions is the only way to lift the fog of uncertainty surrounding tax season and start filing in confidence. The more you do it the more you learn, and the better you get at maximizing your tax savings.
You don’t have to go it alone either. Intuitive filing programs and local tax professionals are readily available to anyone looking for help. So don’t stress tax season, get empowered and get proactive. But, never be afraid to ask a colleague, friend, or a professional for help. If only for the added peace of mind.
