MONEY MATTERS

Filing Taxes 101:

Changes You Need to be Aware of

Tax season is upon us. Here are the changes you should be aware of before filing taxes this year along with a few tips to simplify the process.

1. Reporting Rules for Form 1099-K.

In the past, Form 1099-K was only issued for third party network transactions if “the total number of transactions exceeded $200 for the year and if the aggregate amount of those transactions exceeded $20,000”. Today, a single transaction exceeding $600 can require the third-party platform to issue a 1099-K.

Note: Money transferred between friends and family for gifts, personal expenses or reimbursements are still nontaxable.

2. Child Tax Credit, Earned

Income Tax Credit and Child and Dependent Care Tax Credit

Return to 2019 levels

In 2021, taxpayers with dependents received $3,600 per dependent for the Child Tax Credit. This year, they will only receive $2,000 if eligible. Taxpayers with no children received approximately $1,500 in 2021 for the Earned Income Tax Credit. This year, that price will be reduced to $500. The maximum Child and Dependent Care Tax Credit was $8,000 in 2021. It will now return to a maximum of $2,100.

3. No above-the-line charitable deductions

An above-the-line deduction is an expense that can be deducted from a taxpayer’s gross income before calculating their adjusted gross income (AGI). This type of deduction is available to all taxpayers regardless of whether they itemize their deductions or take the standard deduction. Examples of above-the-line deductions include contributions to a traditional IRA, student loan interest, alimony payments, and certain business expenses. But unlike during Covid-19, if you take a standard deduction this year, you will not be allowed to take an above-the-line deduction for charitable donations.

4. Expanded Eligibility for the

Premium Tax Credit.

The Premium Tax Credit is a refundable tax credit that helps eligible individuals and families afford health insurance purchased through the Health Insurance Marketplace. Under the American Rescue Plan, eligibility for the Premium Tax Credit was expanded to individuals and families with incomes between 100% and 400% of the federal poverty level. So, for the 2022 tax year, taxpayers may still qualify for temporarily expanded eligibility.

5. Eligibility Rules to Claim Tax

Credit for Clean Vehicles.

Due to the Inflation Reduction Act of 2022, there will be significant changes to the eligibility rules for tax credits available for clean vehicles in 2023. Changes include a new final assembly requirement and transition rules for vehicles bought before August 16, 2022. There is also updated information about vehicles bought and delivered between August 16, 2022, and December 31, 2022.

Simple Tips for Filing Taxes:

■ Gather necessary documents:

Before beginning the tax process, make sure you have all your important documents such as W-2s and 1099s ready. This will make it easier to complete your taxes quickly and accurately. ■ Take advantage of online services:

Many tax preparation software programs are available online that can help make filing taxes simpler and less stressful. These programs often supply helpful guidance throughout the filing process and can even be used to file taxes electronically for free or for a small fee. ■ Double-check for mistakes: Before submitting taxes, it’s a good idea to double-check all the information provided on the form or online taxes program to ensure everything is correct and complete. This could help reduce any potential issues that may occur in the future.

It is no secret that filing taxes can be a daunting and complicated process, but with the right information and tips it doesn’t have to be. Visit irs.gov for more advice on how to get ready for tax season!