Yes, it’s actually time to start thinking about your taxes.
The IRS will start accepting your 2023 tax returns as soon as January 29, and the changes this year could mean a little extra money in your pocket.
The headline this tax season is that inflation impacts taxes, but what does that mean for you?
“I think this will mean more money in people’s paychecks in 2024,” said Ted Jenkin, CEO of Oxygen Financial.
The IRS is raising tax brackets by 5.5%, which financial expert Jenkin says could mean you’ll owe less in taxes or get a larger refund.
“So what that will mean for most Americans is if your income is flat or rising by less than 5.5%, you should get a pay raise this year because the tax brackets are larger,” Jenkin said.
After that, the standard deduction increases — also due to inflation — rising by $1,800 from last year to $27,700 for married couples filing jointly.
For single taxpayers, the standard deduction rises to $13,850 for 2023, an increase of $900.
“It’s great news. You know, there are a lot of people who make minimum wage or may only make $50,000 a year, and because, as a married couple, the standard deduction is $29,200, there are a lot of people who simply, even if they own in Homeowners, even if they pay property taxes, may not take itemized deductions.“So, I think what the IRS is trying to do is make it easier for more Americans to file their taxes,” Jenkin said.
Another big change this year is tax breaks for electric cars.
“What changed this year is literally at the dealership. You can get a federal tax credit of up to $7,500 for a new car. You can get it for up to $4,000 for a used car, depending on your income. If you install a charger at home, you could You can get an extra $1,000.
And don’t forget – tax credits for energy efficient home improvements.
“And if you run the system correctly, you may be able to get up to $3,200 in tax credits. “Some people have put in new windows and new doors, but they simply haven’t applied for the tax credit,” Jenkin said.
Finally, this tax season, the IRS is testing its own tax filing software:
The new IRS Live File program, a free IRS pilot, will allow taxpayers in 13 states, including Arizona, California, Massachusetts, Texas, Florida and New York, to file their taxes online for free directly to the IRS.
“You may be able to get your refund faster. Sometimes, these big tax companies will charge you some interest while you get your refund. And that’s directly with the IRS. $11 billion a year is spent on tax preparation fees. So one, no fees,” Jenkin said. “Second, you may get your money back faster.”
If you’re not already paying close attention to the presidential election, now is a good time because your money is on the line, Jenkin says.
“Paying close attention this year among both Democrats and Republicans to see what their tax policies are going to be,” Jenkin said. “We are $34 trillion in debt. The two real ways the federal government generates revenue is the personal income tax and the payroll tax. So keep an eye on those two policies and think about How they affect your financial future.
See more: In 41 states, the poor pay a higher share of taxes than the top 1%
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