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Tax Prep Checklist for 2023
Like it or not, tax season is already upon us.
January 1, 2023

Like it or not, tax season is already upon us. With three months still remaining until the deadline, now is the perfect time to begin preparing your tax return. Taking the initiative now will help you avoid the anxiety and chaos that can come with waiting until the last minute.

New Tax Information for 2023 (2022 Tax Year)

Taxpayers may be surprised to find that their refunds for the 2022 tax year are significantly lower than in the previous year, due to the return of certain tax credits to their 2019 levels. This includes the Child Tax Credit (CTC), Earned Income Tax Credit (EITC), and Child and Dependent Care Credit. Those who received $3,600 per dependent in 2021 for the CTC will now be eligible for $2,000 in the 2022 tax year. For the EITC, eligible taxpayers with no children who got roughly $1,500 in 2021 will now get $500 in 2022. Additionally, the Child and Dependent Care Credit has been reduced to a maximum of $2,100 in 2022, down from $8,000 in 2021.

For 2022, taxpayers who take the standard deduction will not be able to claim an above-the-line deduction for charitable donations, unlike during the COVID-19 Pandemic when they could take a $600 charitable donation tax deduction on their tax returns.

In 2022, more individuals and families may be eligible for the Premium Tax Credit (PTC), a refundable credit that can help cover the cost of health insurance purchased through the Health Insurance Marketplace.'



Here's what you'll need...

Personal: To ensure a speedy return of your refund, please have your full name, social security number, home address, date of birth, and copies of last year's federal and state tax returns ready. If you are married, you will need to provide the same information for your spouse. To make the process even faster, we suggest having your bank account number and routing number available for direct deposit.

Dependent: You must have all the data listed above from your dependents to complete this. Additionally, if it applies to your case, Form 8332 must be obtained to demonstrate that the custodial parent of the child is relinquishing their right to claim the child.

Income: Many of these forms are not necessary to file taxes annually. For instance, a 1099-G is only required when you have received unemployment benefits, and a 1099-S is only necessary when you have sold real estate.

  • Employed income
    W-2 forms for you and your spouse

  • Self-Employed income
    1099-K or 1099-NEC if you are self-employed or earning income as an independent contractor

  • Unemployed income
    1099-G for people receiving unemployment

  • Property/Rental income
    1099-S if you sold any property
    1099-MISC if you are receiving income from a rental property

  • Retirement income
    SSA-1099 and 1099-R for Social Security benefits and retirement plan distributions

  • Investment income
    1099-B, 1099-DIVE and 1099- INT for stock sales, dividends and interest

  • Other miscellaneous income
    Schedule K-1 reports distributions from trusts and estates to beneficiaries
    Amount of alimony received
    Jury Duty pay
    Any debt cancellation, scholarships, etc.
    Cryptocurrency transaction records
    Gambling winnings – a federal tax hit comes when your gambling winnings reach $600 or more

Deductions:

  • Property Deductions
    Form 1098 shows any mortgage interest, mortgage insurance premiums, and points you paid throughout the year.
    Real estate taxes

  • Income deductions
    Local and state sales or income taxes
    Business owners will need records of their business expenses

  • Other miscellaneous deductions
    Out-of-pocket medical expenses
    Charitable donations
    Childcare expenses Education expenses — this includes what teachers have paid for classroom supplies. You'll need Form 1098-E if you paid any student loan interest. Form 1098-T is for higher education expenses.

  • Alimony paid

  • Contributions to retirement plans

2024 Tax Changes to Keep In Mind

It's wise to start preparing for next year's tax season early. A major change that was originally planned to be implemented in 2023, but has been pushed back to 2024, is the new requirements for filing Form 1099-K. This form is used to report income from PayPal, Venmo, and other third-party network payments. In the past, only those who made more than 200 transactions worth over $20,000 had to file a 1099-K. However, the American Rescue Plan Act of 2021 has drastically lowered this threshold, so now a single transaction of over $600 on one of these networks can trigger the form. This could lead to people mistakenly receiving a 1099-K for personal transfers, which is why the IRS delayed implementation for a year to help clear up the confusion. The IRS has stated that the reporting change does not apply to personal transfers, such as reimbursements or gifts between family and friends. Although you won't have to worry about it this tax season, if this change applies to you, make sure you understand the new requirements for next year.
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