Tax Update and Reminders for 2023

As 2023 begins, we want to take a moment to let you know there are a few items specific to 2022 that could impact your tax filing including:

Some Tax Credits Return to 2019 Levels

This means that affected taxpayers will likely receive a significantly smaller refund compared with the previous tax year. Changes include amounts for the Child Tax Credit (CTC), Earned Income Tax Credit (EITC) and Child and Dependent Care Credit.

• Those who got $3,600 per dependent in 2021 for the CTC will, if eligible, get $2,000 for the 2022 tax year.
• For the EITC, eligible taxpayers with no children who received roughly $1,500 in 2021 will now get $500 in 2022.
• The Child and Dependent Care Credit returns to a maximum of $2,100 in 2022 instead of $8,000 in 2021.

No Above-the-line Charitable Deductions

During COVID, taxpayers could take up to a $600 charitable donation tax deduction on their tax returns. However, in 2022, those who take a standard deduction may not take an above-the-line deduction for charitable donations.

TAX FILING DEADLINE

The tax filing deadline for 2022 individual returns (or extensions) is
April 18, 2023.

Still Waiting for Status of Last Year’s Tax Return?

For our clients who are still waiting for confirmation that last year’s tax return processed, or for a tax year 2021 refund or stimulus payment to process, the IRS is requesting that you be patient. As of November 11, 2022, the IRS had 3.7 million unprocessed individual returns. These include tax year 2021 returns and late filed prior year returns. They also had 900,000 unprocessed Forms 1040-X for amended tax returns. The IRS is processing these amended returns in the order received and the current timeframe can be more than 26 weeks.

Tax Facts Chart

To start out the new year, we have added the 2023 Tax Facts chart on our Resources Page. The chart lists the various federal, state, and local tax rates and limits for payroll taxes, individual income taxes and other tax-related data. If you would like this chart in print format, please let us know and we will gladly send you a copy.

Resources Page

As information for 2023 is made available, we will continuously update the Resources Page on our website. Additional items will include the 2023 earned income and business privilege tax rates by county and 2023 income tax due dates.

Questions?

Should you have questions about year-end payroll processing, or any other topics related to your personal or business situation, please contact us at any time.

DISCLAIMER: The WM Update, WM Wednesday Wisdom, WM Daily Update COVID-19, COVID-19 Business Resources, COVID-19 Client News Alerts and other related communications are intended to provide general information, including information regarding legislative COVID-19 relief measures, as of the date of this communication and may reference information from reputable sources. Although our firm has made every reasonable effort to ensure that the information provided is accurate, we make no warranties, expressed or implied, on the information provided. As legislative efforts are still ongoing, we expect that there may be additional guidance and clarification from regulators that may modify some of the provisions in this communication. Some of those modifications may be significant. As such, be aware that this is not a comprehensive analysis of the subject matter covered and is not intended to provide specific recommendations to you or your business with respect to the matters addressed.