If, like me, you’re preparing to file your 2023 tax return, there are things you should know before you sign on the bottom line.  Most important, the deadline is Monday, April 15, 2024. And whether you do your taxes by hand, use software, or hire a professional, you’ll need to gather tax related income and expense documents and receipts. Of course, the best source of tax information is the Internal Revenue Service itself. But here are some 2023 tax return changes and tips to keep in mind while digging through your files. I hope they will make working on your returns a little less taxing (bad pun intended.)

2023 Tax Return Changes

While reading through the IRS site for changes I found this announcement: “The IRS will end unannounced visits to taxpayers by agency revenue officers.” Whew! I didn’t know they could make surprise visits.  But I’m glad they finally came to their senses. Here are some other changes for 2023.
For more information see IRS 2023 Tax Changes.

Income Tax Brackets

• 37% for single taxpayers with incomes greater than $578,125 ($693,750 for married couples filing jointly)
• 35% for incomes over $231,250 ($462,500 for married couples filing jointly)
• 32% for incomes over $182,100 ($364,200 for married couples filing jointly)
• 24% for incomes over $95,375 ($190,750 for married couples filing jointly)
• 22% for incomes over $44,725 ($89,450 for married couples filing jointly)
• 12% for incomes over $11,000 ($22,000 for married couples filing jointly)
• 10% for single taxpayers with incomes of $11,000 or less ($22,000 for married couples filing jointly)

The Standard Deduction

For Married Couples Filing jointly the standard deduction increases to $27,700. The standard deduction for single taxpayers and married individuals filing separately increases to $13,850. Heads of households have a standard deduction of $20,800.

Charitable Donation Deductions

The income tax deduction limits for gifts to charities are 30% of Adjusted Gross Income for non-cash assets and 60% of Adjusted Gross Income for contributions of cash. The overall limit is generally 50% of AGI.

Gift Exclusions

The annual exclusion for gifts increases to $17,000 for calendar year 2023.

Tax Deductions You Might Miss

If you itemize expenses make sure you include all the deductions you’re entitled to. The best place to learn about deductions is the IRS’s Credits and Deductions for Individuals page. But you might also be interested in 50 Most Overlooked Tax Deductions.

IRS Red Flags

Of course you should use all the itemized deductions you’re entitled to, but sometimes the rules aren’t clear. Here’s a list of Questionable Deductions that might cause the IRS to flag your return. You want to avoid that at all costs. Anyone who has been audited by the IRS can tell you what a pain in the neck it is.

• Prepare and mail paper returns yourself (free).
• E-file using commercial software. See reviews of popular software at nerdwallet.com. To check for a better price do an online search for the program’s name + “coupon.”
• Find local tax pros authorized by the IRS to e-file: See  Authorized Providers
• Find national or tax preparation companies near you: See the Financial Matters category at HabiLinks guide for national tax preparation companies. If you’d rather work with a smaller company or an individual, search the web for “tax preparation services (city).”
• File online for free with an IRS Free File provider. Access details from IRS free file, not the brand’s home page. Best for adjusted gross income (AGI) of $73,000 or less.
• Free tax return preparation for qualified taxpayers. The IRS Volunteer Income Tax Assistance (VITA) and the Tax Counseling for the Elderly (TCE) programs offer free tax help and e-file for taxpayers who qualify. Learn more about free tax return preparation.

Ready to Start? Here’s Information You May Need:

Alimony paid or received
Business income and expenses
Charitable contributions, cash
Charitable contributions, non-cash
Residential clean or efficient energy improvement costs for solar panels, water heaters, etc..
Daycare expenses: Costs for day care or after-school programs
Dependent care expenses
Electric car purchase documents
Employee moving expenses
Employee business expenses
Employee home office expenses
Employment income: W-2 form
Gambling income & losses
Health insurance expenses
Health insurance reimbursements
Health savings account contributions and distributions
Interest expense
Interest income
Investment forms: capital gains, dividend income, retirement distributions, etc..
Loan forms: Home mortgage, student loans, forgiven personal loans, etc..
Medical and dental expenses
Partnership K-1 forms
Real estate tax bills
Real estate statements regarding the sale or purchase of property
Rental and royalty income and expenses
Social security benefits
Taxes paid
Tax refunds
Unemployment income form

Which Records To Keep & How Long

Generally speaking, you should keep tax related records 3-7 years.  For specifics, see How Long Should I Keep Tax Records? Get suggestions for what personal records to keep and what to toss at What Personal Documents Should You Keep and for How Long? However rather than figuring out how long to keep various records,  I just keep everything for at least seven years.

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