According to the IRS, a significant factor in 2022 will be the absence of stimulus payments.
You probably won’t get a tax refund that is as significant as you have in the past in 2023, the IRS gave a warning.
In 2022, the absence of stimulus payments will be crucial.
In a statement, the IRS warned that refunds “may be smaller in 2023.” Since there were no Economic Impact Payments for 2022, taxpayers won’t get an extra stimulus payment with their 2023 tax refund.
Economic Impact Payments, which are the official name for stimulus payments and were given out during the COVID-19 pandemic, resulted in many taxpayers receiving additional refunds over the past two years. The final stimulus payment was made in March 2021, and since there won’t be another until 2022, taxpayers won’t receive the extra cash in their refunds.
Another significant change is that charitable contributions will no longer be deductible for taxpayers who choose to take the standard deduction rather than itemize. In 2021, even those who did not itemize other deductions were able to temporarily deduct $300 per person and up to $600 per family for charitable contributions. That will not be permitted this year.
According to the IRS, the standard deduction is used by nearly 90% of taxpayers.
For third-party networks that handle payments for conducting business, like Venmo or CashApp, the IRS has lowered the reporting threshold. Before 2022, if there were more than 200 payment transactions in a single year and the total value of those transactions exceeded $20,000, Form 1099-K was used to report those transactions. According to the tax agency, the ability for a single transaction to trigger a 1099-K reporting requirement has increased to $600. This change “enables taxpayers to more easily track the amounts received,” the tax agency claimed.
According to the IRS, the money given as a gift or used to pay for personal expenses by friends and family members via a third-party app is not taxable.
The IRS advised against relying on a tax refund to pay bills or make major purchases by a specific date even though processing on returns for 2022 won’t begin until early in the new year.
According to the IRS, some returns may need a more thorough examination and may take longer.
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