Things to know before filing your Federal Income Tax Return

The IRS has officially announced 2023 e-File Tax season starts in January 2023.

Here’s What You Need to Know About the Upcoming Federal Income Tax Return.

1.  File an accurate return and use e-file

Taxpayer should electronically file Federal Income Tax Return as soon as they have everything they need to file an accurate return. Also, make sure you have all this personal documentation for each before you file your Federal Income Tax Return to secure and successfully submit an electronically filed tax return to the IRS.

·  Income from jobs: Forms W-2 for you and your spouse

·  Any investment income: Forms 1099 (INT, DIV etc.)

·  Education expenses

·  Medical bills

·  Property taxes and mortgage interest: Form (1098)

·  Any charitable donations

·  Classroom expenses 

·  State and local taxes

·  Last year’s taxes

2.  Choose direct deposit

Internal Revenue Service (IRS) recommends choosing direct deposit to avoid Federal Income Tax Refund delays and get your refund faster. Therefore, prepare to visit your tax professional with the copy of check or bank account details such as: Routing and Account number where you want your refund to be securely deposited. 

3.  Know your Deductions 

Know your deductions as deductions help reduce your taxable income which generally means a lower tax bill in case you must pay IRS. The important aspect to claiming deduction is documentation – not only your deduction documentation protects you if you’re ever audited, it can also cut your tax bill.

4.  Tax credits

Tax credit might be little complex to understand for non-tax professional. So, let’s break it down, Tax credit is a tax incentive also known as a provision that reduces a taxpayer’s final tax bill (dollar for dollar cuts) in any tax you owe to IRS. Important key to remember here is a tax credit differs from tax deductions and tax exemptions, which reduce taxable income rather than the taxpayer’s tax bill. 

Here are some popular Tax credits:

·  American opportunity and lifetime learning credits: Such as tuition and fees deduction Form (1098-T)

·  Child tax credit: Standard child tax credit is worth up to 2,000 per child for the 2022 tax year. 

·  Retirement savings contributions credit: Contributions to a (401k). 

5.  Tax deadline

General tax deadline is April 15; however, this year (2023) tax deadline is extended to April 18 for the following reason:

The standard deadline for 2023 Federal Income Tax Return falls on a Saturday; whenever the tax deadline falls on a weekend, the IRS moves the deadline day to the next business day. April 17, 2023 is Monday falls on Emancipation Day, a holiday recognized in Washington, DC., where the IRS headquartered is located thus, moving to April 18, 2023.