The personal tax system can be incredibly confusing without understanding what you should and shouldn’t do throughout the year. More often than not, issues arise that you could have prevented had you been more attentive when filing.
To avoid problems down the road, take some time to review some of the most common personal tax questions that people have. Here are the top five things you should pay attention to when filing.
1. When Are Taxes Due in 2023?
The due date for filing federal tax returns (Form 1040 and its instructions) is April 15, 2023. Taxpayers may also get an automatic six-month extension to October 15, 2023.
Using the IRS Tax Calculator or consulting a tax professional, you can estimate how much you owe. Paying personal taxes on time will help you avoid penalties and interest.
2. Is the Standard Deduction Higher in 2023?
The Temporary Increase in the Standard Deduction will expire in 2023, so those amounts will remain the same. Those who can itemize deductions can benefit from higher deductions if the IRS decides to increase the part of the Standard Deduction.
The tax rate structure remains the same, with the lowest rate of 10% and the highest rate of 37%. There are also seven other brackets, ranging between 12 and 35%. For single filers, it is $12,550, and for married joint filers, the amount is $25,100.
3. Are All Personal Deductions Eliminated?
No, they have not eliminated all personal deductions for the tax year 2023.
If you have qualified expenses, you can deduct them from your taxes. If you need help determining your eligible deductions, you can speak with a tax advisor or accountant.
Consider this website, StartanExchange.com, which provides comprehensive tax tips and reviews of different service providers. They work hard to find helpful answers to personal tax questions and provide unbiased reviews of other tax preparation options.
4. Do I Have to Report Cryptocurrency Gains?
Yes, you must report any cryptocurrency gains received in 2023. When you trade cryptocurrency, the IRS classifies this as a capital asset, meaning it is subject to capital gains taxes.
Any time you profit from your cryptocurrency’s sale, it is considered a taxable event. When you file taxes at the end of the year, you must report all profits from cryptocurrency trades.
You should also keep a record of any cryptocurrency transactions from the past year so that it is easier to calculate crypto-related gains or losses when it is time to file taxes.
5. What’s the Child Tax Credit for 2023?
The Child Tax Credit for 2023 is $2,000 per qualifying child. To qualify, the child must be under the age of 17, have a valid social security number, and they or their parents must be US citizens or resident aliens.
Eligibility and the amount of Child Tax Credit one can receive depend on the taxpayer’s total income and filing status. Partial or full refunds may also be available if the taxpayer’s income exceeds certain thresholds. However, not all taxpayers can use the full $2,000 Child Tax Credit.
Common 2023 Tax Questions
Most Personal Tax Questions for 2023 have been answered with this guide! You’ll be able to fill it with confidence with the information provided. The most important thing is to take the necessary steps to maximize your return and reduce your liabilities. Consulting a professional tax preparer is the best way to ensure you maximize deductions and credits.
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