Tax season is an important time of year. Taxpayers need to be aware of the most recent tax law changes in order to ensure they are filing their returns correctly and taking advantage of available tax benefits. As a tax preparer, it is important to know the most recent changes in order to provide accurate and up-to-date advice to clients.
In the United States, there are several important tax law changes that have been passed for 2022 that will need to be recalled for filing taxes in 2023. These changes may affect the amount of taxes owed, the deductions available, and the credits taxpayers can claim.
Knowing these changes can help preparers provide better advice to their clients and ensure that they are taking full advantage of all the available tax benefits. Here are eight important tax law changes to remember for 2022 returns in 2023:
1) Recovery Rebate Credit
The recovery rebate credit is seen as a tax credit available to eligible taxpayers in the United States. The credit is designed to provide financial assistance to individuals and families who have been affected by the coronavirus pandemic.
This tax credit is available to eligible taxpayers who did not receive the full economic impact payment (EIP) in 2020 or 2021. The recovery rebate credit is equal to the difference between the EIP the taxpayer actually received and the maximum EIP they were entitled to receive. Keep in mind that clients can only claim this if their 2020 or 2021 tax return hasn’t been filed yet.
2) Child Tax Credit
Child Tax Credit (CTC) is a credit available to taxpayers with dependent children, specifically under the age of 16. The CTC was created to help families with children by providing a tax break for those with incomes below certain thresholds. It’s been in effect for years and has been modified several times. The CTC can be claimed by both the parents or guardians of the child.
The credit costs up to $2000 per child, but only $1500 is refundable. Annual increases will entail a total refund of $1600 in 2023. As a tax preparer, it’s important to know that taxpayers who owe taxes will have the credit applied to their tax liability.
3) Earned Income Credit
The earned income credit is a type of tax credit that’s available to taxpayers who have low to moderate incomes. It is designed to provide financial assistance to those working but still struggling to make ends meet. EIC is a refundable tax credit, meaning that even if you owe no tax, you may still be eligible to receive money from the government through the EIC.
Like previous types, the credit is refundable, which means that taxpayers who owe taxes will receive the credit as a refund. However, the guidelines will be reverting back to 2020 guidelines in 2023, forgoing the extended provisions and requirements.
Conclusion
In conclusion, it is important for tax preparers to be familiar with the important tax law changes in the US for 2022. Such information can help you properly prepare taxes for their clients in 2023. Stay tuned for part two. Looking to integrate professional tax preparation software this 2023? Keystone Tax Solutions offers professional tax software for tax preparers in the USA. Try it today!
