Let’s be real. Tax season is just around the corner, and it won’t be long before April arrives. These 2023 tax updates are an enhanced basic deduction and modified tax rates. As a result, it’s never too early to start thinking about taxes, especially if you own property and run a business (or, say, if you bought a new cutting-edge vehicle). Here are the top 5 tax-related items you should be aware of for the 2023 tax season, which is due on April 18.

Payment App Reporting Is Stopped For A Year

There has been a lot of misinformation around a new rule requiring payment applications, such as Venmo, Cash App, and Paypal, to report users’ revenue of $600 or more. These applications now only need to declare income of at least $20,000 for this tax season after the IRS stated in late December that it was deferring that requirement by one year. However, people still need to submit a report to the IRS if all or a portion of their income comes from the gig economy. It will give the IRS and the apps one more year to figure out how to accurately record all financial transactions, whether for personal or commercial use.

Expect Smaller Refunds

In 2023, you can expect a much lower return. It is a result of the IRS reducing various tax credits to reflect levels for 2019. People who received $3,600 for each dependent last year might receive $2,000 this year. Taxpayers who previously qualified for the Earned Income Tax Credit and got $1,500 are now eligible for $500. Also, the Child and Dependent Care Credit’s upper limit has been reduced from $8,000 to $2,100.

When To File Your Taxes

Knowing when to file your tax return and when to pay any unpaid taxes is essential. Penalties and interest charges could be applied if these deadlines are missed. Are you wondering if you need to file a return? Visit www.irs.gov/help/ita/do-I-need-to-file-a-tax-return to find the answer. To determine your gross income, you’ll need to know your filing status (single, married, widowed, etc.), the amount of federal income tax withheld, and a few other crucial facts.

Itemized Deductions

If you want to itemize your deductions, you can deduct potential tax-deductible expenses from your income. Popular itemized deductions include state and local taxes, mortgage interest, and charitable contributions. You can use the IRS’s calculator at www.irs.gov/help/ita/how-much-is-my-standard-deduction to determine your standard deduction.

Understand Tax Credits

Tax credits can offset your tax liability on a dollar-for-dollar basis. They are quite beneficial because they can significantly reduce your tax obligation. Common tax credits include the Child Tax Credit and the Earned Income Tax Credit (EITC).

These are just five of the many tax-related details for 2023 that you need to know. Always do your research, compile all the necessary documentation, and, if you’re too busy with your business to learn everything, consult with a competent tax expert in your region if you don’t have the time. You can save a lot of money for the upcoming tax season by having the right knowledge and a partner for your tax preparation. Please don’t hesitate to ask any further questions you may have about filing taxes. It will be our pleasure to help you with your tax preparation needs.

Need help with your 2023 tax preparation and bookkeeping? Pacific Tax Professionals is here to help.

Get more information about Pacific Tax Professionals and set up a free consultation. To help your small business survive tax season, we’ll ensure you’re always on top of all 2023 tax filing and tax preparation in Pasadena.