For the 2023 tax year, several new federal tax laws and adjustments went into effect. Here are some key changes:
1. Tax Inflation Adjustments: The IRS announced annual inflation adjustments for more than 60 tax provisions, including tax rate schedules and other tax changes. (Refer to: https://www.irs.gov/newsroom/irs-provides-tax-inflation-adjustments-for-tax-year-2023)
2. Major Policy Change by IRS: A significant policy change was announced in July 2023, ending most unannounced visits to taxpayers by agency revenue officers. This move aims to reduce public confusion and enhance safety measures for taxpayers and employees. (Refer to https://www.irs.gov/newsroom/fact-sheets-2023)
3. Reporting Rules for Form 1099-K: There’s a change in reporting rules for Form 1099-K, Payment Card and Third Party Network Transactions. Taxpayers should receive Form 1099-K by January 31, 2023, if they received third-party payments in tax year 2022 for goods and services that exceeded $600. (Refer to: https://www.irs.gov/newsroom/get-ready-for-taxes-whats-new-and-what-to-consider-when-filing-in-2023)
4. 2023 Tax Brackets and Rates: There are seven federal income tax rates in 2023: 10%, 12%, 22%, 24%, 32%, 35%, and 37%. The top marginal income tax rate of 37% applies to taxpayers with taxable income above $539,900 for single filers and above $693,750 for married couples filing jointly. (Refer to: https://taxfoundation.org/data/all/federal/2023-tax-brackets/)
5. Increased Paychecks Due to IRS Rules: The IRS raised the maximum amounts one can claim for the Earned Income Tax Credit (EITC) by about 7%, which could result in bigger paychecks. However, the additional money will not be received until the 2023 taxes are filed in early 2024. (Refer to: https://www.cnn.com/2022/10/19/success/inflation-adjustment-2023-taxes/index.html)
These changes reflect some of the US Federal government’s efforts to adjust to inflation and economic conditions, aiming to provide relief and clarity to taxpayers.
If you have questions, please contact us. We are happy to help:
Majid Tavabi, EA LLC
WK Tax & Resolution Services
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