Taxes 2023: These are the most important tax changes this year (2023)

Some of the biggest tax changes this year are the tax breaks you won't get after pandemic-era credits expire.

But the Cut Inflation Act does bring some tax breaks for green Americans. Also new this filing season: the expiration of the owner deduction, potential double taxation for some remote workers, and a state filing deadline. A proposed change that likely would have caused confusion was scrapped late last year before taking effect.

Taxpayers should avoid becoming overwhelmed by changes, focusing only on those that affect their returns and leaving the rest to the tax experts.

"Tax law as a whole is too broad to keep up with all the changes, so my advice is for taxpayers to know their own tax laws," Adam Brewer, tax attorney and founder of AB Tax Law APC, told Yahoo Finance. "Review your 2021 tax return and use it as a framework for the information and documents you need to collect for your 2022 taxes. Then, think back to 2022 to remember all the events you suspect will happen and that will affect your tax return."

These are the changes that could affect you this year.

Say goodbye to pandemic-era tax credits

There have been temporary changes to the tax code over the past two years in response to the pandemic and the economic devastation it has wrought. In the 2022 tax year, many of these tax credits expired.

No stimulus checks

No new stimulus checks, also known as economic impact payments, were issued in 2022. This means taxpayers don't have to worry about receiving letters from the IRS confirming the number of stimulus checks they received to file taxes. You also cannot claim a refund credit.

Core credits are returning to 2019 levels

the amounts ofalimony(CCT),Earned Income Tax Credit(EITC) and Child and Dependent Care Credit returns to pre-COVID levels.

Enhanced CTC has not been extended and is coming back2.000 $per dependent child for the 2022 tax year, below3.600 $last year. The other big change to the CTC is that it is no longer refundable. This means taxpayers don't get the full credit if it's more than the tax owed.

The maximum a single taxpayer without children can receive from the EITC is $500, compared with $1,500 last year when income limits on the loan were temporarily raised.

Likewise, the child and dependent care credit, which includes daycare and day camps, is worth up to $2,100 for fiscal 2022, up from $8,000 for fiscal 2021.

Charitable deductions must be itemized individually

For taxpayers filing their 2022 tax returns this year, all charitable donations must be reported using thePlanformular Ato get a deduction. This is a big change from the past two years when the IRS offered an above-the-line deduction for contributions.

In 2020 orlaw caresallowed single taxpayers and married couples who applied together to deduct up to $300 in charitable donations without having to itemize their tax returns. Married taxpayers filing separately can deduct up to $150.The deduction has been extended, Single and married applicants who file separately receive up to $300, and joint applicants deduct up to $600.

Say hello to the Inflation Reduction Act tax breaks

ANDInflation Reduction LawEnacted on August 20, 2022, it provided some new tax breaks for taxpayers to take advantage of in the 2022 tax year.

Increased credit for solar energy products.

The law increased Residential Clean Energy Credit. You can now deduct 30% of installation costs for solar heating, solar energy (eg panels) and other solar home products, instead of 26%. There is also no credit or income limit.

In addition, the law removed the primary residence restriction, which means that homeowners who have installed solar products in second homes or vacation homes are also eligible for the loan.

Eligibility for the Electric Vehicle (EV) Tax Credit.

Consumers who have purchased a new electric vehicle (EV) are eligible for theEligible plug-in electric vehicle loanwith a maximum of $7,500 depending on battery capacity.

That hasn't changed, but those who purchased the vehicle between August 17, 2022 and December 31, 2022 must prove that the vehicle has passed final assembly in North America to qualify. This requirement does not apply to vehicles purchased in early 2022, before the law was signed.

"For EV credits, 2022 is a done deal," Robert S. Seltzer, C.P.A./P.F.S. by Seltzer Business Management, Inc. for Yahoo Finance. "Taxpayers need to confirm that the vehicle they are buying is eligible for the loan and for the right amount."

If the credit was applied at the time of purchase from the retailer, the taxpayer is not entitled to the credit on the income tax return.

Premium deduction for overdue mortgage insurance

Homeowners who pay a premium for mortgage insurance or personal mortgage insurance can no longer deduct it from their individual taxes. Lenders typically require mortgage insurance as standard protection for homeowners who pay less than a 20% down payment when buying a home.

The deduction under Section 419 of theTax Benefits and Health Care Act of 2006and Annually Renewed: Not renewed for fiscal year 2022 and no longer available for breakdown.

Remote workers can be taxed twice

Some employers continued remote and hybrid work through 2022. If your employer is located outside of the state where you worked remotely, there may be tax implications for state taxes.

In 2020 and 2021, some states enacted temporary relief provisions to avoid double taxation of income by two states, the state where your employer is located and the state where you worked, but many of these provisionsexpired for fiscal year 2022.

"Four states - Delaware, Nebraska, New York and Pennsylvania - have a 'convenience rule,' while Connecticut has a 'retaliatory' convenience rule that only applies to those who live in other states with their own convenience rule.", Jared Walczak, vice president of state projects for the Tax Foundation, for Yahoo Finance. “Workers unfortunate enough to work remotely while assigned to an office in New York or another state with a convenience rule could be taxed twice [and] without the ability to claim a credit for taxes paid to other states to apply.”

tax day

That typical tax deadline is April 15th. Not this year. This year, the deadline for filing your federal returns is Tuesday, April 18th. This is because April 15th falls on a Saturday and the next business day, Monday, April 17th, is a local District of Columbia holiday observed by the IRS.

Victims of severe storms in California, Georgia and Alabama have things to do15th Maymake your statements.

A change that was not achieved

The American Bailout Act of 2021 required third-party payment networks like PayPal and Venmo to send taxpayersForm 1099-Kwhen receiving third-party payments for goods and services that exceed $600. The previous limit was $20,000 for more than 200 transactions.

The new regulation is expected to come into force for the 2022 financial year.

However, many tax experts were concerned that many taxpayers received these forms in exchange for money received from friends and family as personal gifts or as a way to split restaurant bills. This would not be taxable income and could cause a lot of confusion.

By the end of 2022, the IRSlate implementation.

"Fortunately, the IRS has paused the lower limit of the 1099-K report," Seltzer said. “It's not $600; the limit remains at $20,000.

Ronda is a senior personal finance reporter for Yahoo Finance and an attorney with legal, insurance, education, and government experience. Follow her on Twitter@escriberonda

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