Tax Day is April 15, which means you have about a month to finish your federal income tax return. While you organize documents and start filling out forms, you should know that tax-rule changes in 2023 could affect how you owe Uncle Sam or he owes you:
- Late last year, the IRS announced it was delaying the implementation of a requirement for third-party settlement organizations. Zelle and Venmo were supposed to file Form 1099-K if an individual had at least $600 in transactions during 2023. Instead, reporting will not be required unless a taxpayer received over $20,000 and had more than 200 transactions. The rule applies only to income paid via those networks.
- In 2023, the standard deduction for individuals increased to account for inflation. As a result, you may be better off using the standard tax schedule rather than itemizing your deductions. While it may seem like extra work, calculate which saves you more money.
- You may be eligible for free tax preparation services if you have a low to moderate income. The IRS provides counseling services through the Volunteer Income Tax Assistance (VITA) program and the Tax Counseling for the Elderly (TCE) program.
- The child tax credit was still in flux as of February. The U.S. House of Representatives modified the amount in late January as part of the Tax Relief for American Families and Workers Act of 2024. As of this writing, the U.S. Senate has yet to vote on the matter. If you qualify for the tax deduction, watch for updates from established news organizations and the IRS at its website: https://www.irs.gov/.
- Watch for identity thieves. They have become more sophisticated in the past year. Make sure you’re visiting only legitimate websites for information. When you file your taxes online, use a secure connection and a strong password so crooks don’t steal your information or tax return.
- This is not a new rule but a smart practice to follow: File electronically. It's faster, more accurate, and allows you to track your refund status.
If you qualify for a refund for overpayment of estimated taxes, you may want to opt for electronic payment. It’s easier and safer than asking for a check by mail. If you’re a Tropical Financial Credit Union member, you have the funds deposited directly into a checking or savings account. Think now about how you can best use the money to pay down debts, save for a vacation or significant anticipated expense, or find another way to improve your financial health.
And remember, these tips are meant to provide guidance. You are encouraged to contact a tax advisor to see how your personal situation is affected.
