Lets discuss the 2023 tax season

The Tax Cuts and Jobs Act (TCJA) was signed into law in December 2017, reducing federal taxes for most people. The new law also made some major changes to the way we file our tax returns. The new 2023 tax season will be the first time we’ll see those changes in action. Here’s what you need to know:

The new tax law is set to expire at the end of 2025.

The new tax law is set to expire at the end of 2025. This means that if no changes are made, your taxes will go back to the way they were before the Tax Cuts and Jobs Act (TCJA) went into effect. If this happens, here are some things you should know:

In 2021, you’ll start seeing increased withholding on your paycheck; however, it won’t be enough to cover all of your taxes due when filing in 2022. To make up for this, you’re likely going to have a big bill come April 2023—and possibly even more tax due because of penalties or interest charges.
The TCJA also changed how capital gains are calculated for noncorporate businesses—specifically those with pass-through income like sole proprietorships, partnerships and S-Corporations. To make up for these changes in 2023 and beyond, many business owners may need an accountant skilled at handling small business clients who are affected by these changes (for example: sole proprietorships).

Most Americans will see a tax cut.

The Tax Cuts and Jobs Act lowered the rates for all brackets, and also doubled the child tax credit. The new law has made filing taxes easier for people with children who qualify for this credit. For example, if you have two kids and make about $60,000 per year, your tax burden would be reduced by around 18 percent in 2023.

Fewer people will take the standard deduction because they can’t itemize anymore.

In the past, taxpayers could choose whether to take the standard deduction or itemize deductions. With the new tax law, though, there’s no longer a choice. Taxpayers are automatically taking the larger of their standard deduction or any itemized deductions they qualify for—and this is likely going to impact how much money people save on their taxes.

Because of this change in strategy and because of changes in how personal exemptions are treated (they’ve been eliminated), individuals who previously would have taken advantage of these provisions will now take advantage of their increased standard deduction–which means fewer people will be itemizing what they spent on eligible expenses such as mortgage interest and charitable donations.

You may have to make quarterly estimated tax payments if you own your own business or work as an independent contractor.

If you’re self-employed, have rental income, interest and dividends from investments, or other sources of income that are not included in the W-2 wage statement you receive from an employer, you may be required to make quarterly estimated tax payments. You also might need to make quarterly payments if you are a partner in a business.

The child tax credit has doubled, but the personal exemption has been eliminated.

The personal exemption, a popular tax break that allowed families to reduce their taxable income by $4,000 per person, has been eliminated. That means that you will have to pay taxes on all the money you earn, and there’s no longer any tax break for having kids.

However, there is good news: The child tax credit has doubled from $2,000 per child to $4,000 per child! This means that if you have two children under 17 years old (and you file jointly), then your total tax credit would be worth up to $16,000! This is great news for parents who might not have been able to take advantage of the old system because they didn’t make enough money or had too many children in school at once.

Some people won’t be able to write off their moving expenses anymore.

If you moved for a job, you can’t deduct your moving expenses anymore. If you’re self-employed and the move was related to your business, it’s still possible to write off those costs.
You can still write off moving expenses if the move was for medical reasons or educational ones (including homeschooling). For example, if you need to relocate so that your child can receive an education better suited to their needs, this might qualify as an acceptable deduction.

Be prepared for changes when you file your 2023 tax returns in 2024.

The recently passed tax law will expire at the end of 2025. Most Americans will see a tax cut, but not all taxpayers are winners under the new law.

Tax brackets have changed, with those earning over $75,000 per year paying fewer taxes. Deductions for state and local taxes, mortgage interest and charitable giving are capped at $10,000 each for single filers or heads of household and $20,000 for married couples filing jointly. The standard deduction has also been raised to $12K/individual or $24K/couple (up from $6K/individual or 12K/couple) while personal exemptions have been eliminated entirely. Fewer people will take the standard deduction because they can’t itemize anymore; instead they should itemize if they can’t use their standard deduction (i.e., they don’t make enough money).

Conclusion

I hope this has been a helpful guide for you, and that it gives you some insight into what to expect when tax season comes around. As always, feel free to reach out with any questions or comments!