Curious about which tax updates might affect you and your family? We’re here for you.
This list will help you prepare for changes that could influence your taxes this coming tax season, and shed some light on the tax updates you need to know.
Child Tax Credit
While many are expecting larger sums of money, like the Child Tax Credits in 2021, be aware that amounts will change in 2023. In 2021, for children between the ages of newborn and 5 years old, the Child Tax Credit was $3,600 and for children ages 6 to 18, the amount was $3,000. Moving into 2023, the ages include all children 17 years and younger with a fixed amount of $1,500.
It should be noted this is the previous amount for the Child Tax Credit and we are reverting to it with 2021 acting as an exception to the rule.
Affordable Care Act
Originally planned to make healthcare more affordable and intended to extend subsidies through 2025, the Affordable Care Act (ACA) will change significantly in 2023. From current statistics and findings, premiums will increase about 10% across 72 insurers in 13 states.*
For many families, this increase can lead to sticker shock on quotes and uncertain feelings leading into the future.
Inflation Reduction Act
The Residential Energy Clean Credit includes eligible homeowners who qualify for a 30% tax credit motivating homeowners to add solar or wind power systems to their homes. It includes these tax incentives for water heaters, heat pumps, and HVAC systems designed for energy efficiency.
The Inflation Reduction Act includes legislation providing an additional $80 billion in funding to be rolled out over the next ten years which will allow the IRS to pursue tax enforcement. This will boost tax collections through enforcement actions such as increased audits.
And finally, the act will provide seniors with lower prescription drug costs including lower cost for insulin through Medicare. As it stands today, Americans pay 2 to 3 times what people in other countries pay for prescription drugs. The Inflation Reduction Act paves the way for Medicare to negotiate drug prices, which will involve ten specific drugs at first but will expand to twenty.
Ultimately, The Inflation Reduction Act is designed to lower the cost of medications to Medicare beneficiaries.
CryptoCurrency/Digital Assets
Since crypto currencies and digital assets first started popping up, they’ve been difficult to regulate. With a growing number of people not reporting their earnings of crypto to the IRS, the digital asset and crypto markets have become more challenging to manage. Under the new act, there’s expected to be more audits, more paper trails, and a bit more scrutiny. The IRS updates include an enormous increase in spending for the IRS and their activities and operations for taxpayers.
Most of the $80 billion will go towards compliance and enforcement, meaning more audits, forms, and more digital currency being heavily monitored in the future.
Form 1099-K
Originally, the form 1099-K wasn’t required unless the payee had both $20,000 in gross payments AND 200 application transactions through a calendar year. Now, the threshold is lowered to $600 with no minimum number of transactions.*
To summarize, this means third-party payment services like PayPal, eBay, Airbnb, Venmo, and others will now track and report gross yearly payments of $600 or more to the IRS.
Still need some tax help?
That’s what we’re here for. We know that tax season – along with all the new updates – can be confusing. Let our friendly tax pros help you navigate it all.