Updates That May Affect Your Tax Season

It is officially tax season, according to the Internal Revenue Service (IRS) which declared that this year’s tax season started on Monday, January 23. It’s that special time of year when people collect their documents to either rush over to their tax preparer or enter in themselves so that they can receive those nice tax refund checks.

The IRS estimates that they will receive more than 168 million filers this year, most of who will be filing before the April 18 tax deadline. They are urging all taxpayers to file electronically with direct deposit to speed up the process of receiving refunds and avoid any possible delays.

However, before you file your taxes there are some new updates that you need to be aware of, such as:

• IRS warns that 2023 tax refunds may be smaller: The IRS released a statement that taxpayers should brace themselves for small tax refunds due to no economic impact payments (or stimulus payments) being released in 2022. Also, for people with children, the enhanced child tax credit is now gone, leaving parents with a lower tax refund check than what they received for the 2020-2021 filing years.
• Earned Income Tax Credit or Additional Child Tax Credit filers will have to wait: The IRS will not issue refunds involving the Earned Income Tax Credit or Additional Child Tax Credit before mid-February. This gives the agency extra time to review each case to prevent fraud. Taxpayers who qualify for these tax credits should expect to be updated on their status by February 18, with an expectation that most will receive their refunds by February 28.
• Tax credit available for some new “green” vehicles: If you purchased a new electric vehicle in 2022, you qualify for a tax credit. However, all vehicles purchased after August 16, 2022, after the Inflation Reduction Act of 2022 was enacted, must have been assembled in North America to qualify.
• Payment app reporting paused for one year: The IRS announced in late December that it is delaying that requirement by one year, meaning those apps must only report income of at least $20,000 for this tax season. But still, those who make all or part of their income in the gig economy must report their earnings to the IRS. This will give the IRS and the apps another year to figure out the logistics of reporting monetary transactions, which may be business or personal. This applies to PayPal, Cash App, and Zelle.
• Report digital assets: The IRS wants to remind everyone to report their digital asset-related income when filing their 2022 taxes. The term digital assets refer to Convertible virtual currency and cryptocurrency, Stablecoins, and Non-fungible tokens (NFTs). In the past, they used the term virtual currencies.

Donald Williams is a financial expert, with a career of over 20 years in accounting. He maintains offices in Atlanta and New Orleans. He's also a member of the Forbes Council.