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Keep these important points in mind as you get ready to file your return.
Most of us associate the month of April with filing fees, since that’s when they’re due. But actually, January is a good time to start thinking about your tax return.
For one thing, you can actually submit it at the end of the month if you’re ready by then. And doing so could mean having your refund hit yours bank account sooner.
But this year’s tax season may look a little different than 2022’s. Here’s what you need to know.
1. Your refund might be smaller
Most people who file a tax return end up being owed money by the IRS. And that may continue to be the case this year. But Mark Steber, Chief Tax Information Officer at Jackson Hewittwarns that this year, a lot of people may be in for what he calls a “refund surprise.”
“There were many tax changes in 2021 that resulted in refunds in 2022,” explains Steber. “This year, we may not see refunds as high.”
The changes Steber is referring to came from the American Rescue Plan, a massive stimulus bill that was signed into law in March of 2021. That stimulus package gave the Child Tax Credit a major boost, and because of that, among other factors, a lot of people were owed a higher tax refund in 2022.
But during the 2022 tax year, there were no federal stimulus packages, and the Child Tax Credit reverted to its former rules. So it won’t be surprising to see taxpayers in line for smaller refunds this season.
2. You might need to hire a professional for filing help
Not only was 2022 a year without federal stimulus aid, but it was also a year during which inflation soared. That may have prompted a lot of people to make different financial moves that could affect their taxes.
Some people may have dipped into theirs retirement savings. Others may have sold off stocks to get access to money, or taken on side gigs to boost their income.
If you made any such financial moves or changes, it could pay to hire a tax professional to help you with your 2022 return — even if you’ve historically been able to handle filing your taxes on your own. This way, you can make sure you’re claiming the right amount of income and are taking the right deductions.
3. It pays to file your taxes electronically
We’re starting off 2023 with the IRS sitting on a huge backlog of tax returns from 2022. That means that anyone who submits a paper return this season risks seeing their refund delayed.
If you want to avoid that, file your taxes electronically. The IRS typically issues refunds for electronically filed returns within three weeks. Also, filing electronically could reduce your chances of making a mistake on your tax return. And error-free returns are less likely to be subject to refund-related holdups.
This year’s tax season could look very different from 2022’s. Don’t be surprised if you end up with a smaller refund and need filing assistance. And also, do yourself a favor by filing your taxes electronically, and by getting started on them sooner rather than later.
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