Are you ready to file your taxes? Here's everything you need to know to file taxes in 2023.
Tax season has officially begun. But it also feels like, "oh no, tax season has officially begun."
We know the feeling, which is why USA Today's putting together a series of stories to make the season go smoothly for you. This coverage will help you stay updated with need-to-know information like deadlines and tax brackets, as well as tax tips and explainers of the most important forms to have on hand.
Be sure to follow our coverage for the latest stories or sign up for our tax newsletter so you can get these updates emailed directly to you. Together, we hope to get you across that April 18 deadline on time and fully sane.
File taxes jointly or separately?: A guide for couples who said 'I do' in 2022
Egg costs soar: Why prices climbed 60% in a year
Tax filing deadlines to know
The Internal Revenue Service started accepting and processing tax returns on Monday, Jan. 23. Employers are required to send you your W-2 by Jan. 31. Most 1099 forms are due by the end of January as well. Taxes are due by April 18 but aren't due until May 15 for residents in parts of California impacted by recent storms. If you're granted an extension, you'll have until Oct. 16 to file.
Read more: IRS announces tax filing deadlines 2023
Who has to file a tax return?
Not everyone has to, but most Americans likely will. This depends on income, filing status and age. If you make more than the IRS' minimum income threshold for your filing status (married, single, filing jointly, etc.), you have to file taxes.
People with "special situations" also may have to file a tax return, regardless of income. A few examples include high income taxpayers, household employment taxes, self-employment net earnings of at least $400 or wages of $108.28 or more from a church exempt from employer FICA taxes.
See the full list: Who has to pay "special taxes," what the income thresholds are
What are the 2022 US federal tax brackets?
A tax bracket is a range of incomes subject to a particular income tax rate. The IRS adjusts tax brackets every year to account for inflation, so the threshold for each of the seven tax brackets increased from 2021 to 2022. The IRS has already released tax brackets for this year that will be filed in 2024 based on average annual chained consumer price index from August 2021 to 2022, a period of historically high inflation.
2022 tax brackets: See individual, joint, head of household return brackets
File taxes early for a chance to double your refund money
Tax preparer Jackson Hewitt is hosting a weekly "Double Your Refund" sweepstakes this tax season, awarding 40 winners a matched cash prize equivalent to the value of their federal tax refund. Jackson Hewitt is also selecting 40 runner-up entrants each week to win $400. You can gain a sweepstakes entry by filing your taxes with Jackson Hewitt or, if you don't file your taxes with them, by mailing in an entry by the Monday of the following week.
Double your tax refund: File early for a chance to win with Jackson Hewitt
What are 1099, W-4, W-2, W-9 and 1040 forms?
As tax season begins, it's important to understand the tax forms sent to you or the ones you're required to complete.
W-9: Form typically used by independent contractors, freelancers and gig workers to provide identifying information such as your Social Security or tax identification number
1099: Used to report income that isn't directly earned through an employer
W-4: Tells your direct employer how much federal income tax should be withheld from your paycheck
W-2: Form your employer sends you by the end of January documenting how much money you earned working for them and how much tax was withheld from your paychecks
1040: Umbrella form for individual tax return
5695: Declares any residential energy credits you may qualify for
Explore the forms: 1099, W-4, W-2, W-9, 1040 explained
What is OASDI?
OASDI tax, often referred to simply as "Social Security," is the Old-Age, Survivors and Disability Insurance program. This tax is one part of FICA, which funds Social Security and Medicare. OASDI taxes are a 6.2% flat rate taken out of employees' paychecks and matched by employers. Self-employed individuals pay a higher rate of 12.4% for OASDI tax.
What is OASDI tax on my paycheck?: Why we pay this federal tax
Tax season for new parents: What to know
We know taxes aren't the first thing on your mind after recently having or adopting your first child, but tax season doesn't wait for anyone. Here are some tips to make filing your taxes less complicated as a first-time parent:
Get a Social Security card for your child so you can claim them as a dependent
If you're a single parent, make sure you're considered the head of household to get a separate, more favorable tax bracket. The IRS won't automatically recognize you as one.
Claim adoption tax credit for up to $14,890 in adoption-related expenses.
Fill out a new W-4 form if you work for an employer to reflect that you now have a dependent
Learn more: Amount, qualifications of 2023 Child Tax Credit and EITC
What is capital gains tax?
Capital gains tax is a tax on any profit you make from buying an asset at one price and selling it for more. Capital gains tax applies to real estate, bonds, mutual funds, NFTs or cryptocurrency and jewelry or coin collections.
The amount you will be taxed on capital gains depends on how long you've held a certain capital asset and your income.
See full rates: A guide to long-term vs. short-term, 2023 rates and more
IRS may owe you from 2020 taxes
Does the IRS owe you money from your 2020 tax return? The American Rescue Plan Act allowed millions of Americans who received unemployment benefits in 2020 to exclude up to $10,200 (or double that for couples) from their taxable income if they earned less than $150,000 a year.
Because the one-time change came in March 2021, after tax season had begun, the IRS said it would make corrections. The IRS is already finished with this process, so those they missed must file a 1040-X form to amend it.
Filing an amendment for 2020 taxes: Whether its worth it, how long you have
Do you have to report crypto on taxes?
Yes -- the IRS requires taxpayers to report "all digital asset-related income" on their federal income tax return. This includes cryptocurrency, non-fungible tokens (NFTs) and stablecoins. This question is listed on your 1040 tax form: "At any time during 2022, did you: (a) receive (as a reward, award, or payment for property or services); or (b) sell, exchange, gift, or otherwise dispose of a digital asset (or a financial interest in a digital asset)?"
Report digital assets: Whether to answer 'yes' or 'no,' filing 8949 and Schedule D
What is a 1098-E form?
The 1098-E form is a student loan interest statement that shows how much interest you paid on student loans and whether you qualify for deductions. Download and fill out a 1098-E form only if you paid at least $600 in student loan interest.
Do I need to file a 1098-E form?: Everything to know about student loan deductions
Should I do my taxes myself?
Deciding between hiring someone to do your taxes and taking the DIY route can be tricky. If you have a limited number of income sources and you plan to take the standard deduction, doing your own taxes will save you money and will be fairly straightforward. You can also check if you qualify for one of the IRS' free filing programs. If your taxes are complicated (like receiving income from many different sources or after a major life change) it's wise to hire a professional.
More advice: When to hire a professional, when to do your taxes yourself
IRS free file options: Your 2023 guide to free tax prep services
Is Social Security taxable?
Yes, many who receive Social Security benefits will have to pay an income tax on that money. Your combined income (adjusted gross income plus Nontaxable interest plus half of your Social Security benefits) determines the amount you owe.
See the breakdown: How much of my Social Security benefits are taxable?
What is income tax? Does my state have state income tax?
Income tax is a tax on income that goes toward public services, government obligations and providing goods for the public. There are several different types of income tax:
Individual income tax (personal income tax): Tax on wages, salary or other forms of income. It is generally imposed by the state
Business tax: Tax applied to corporations, small businesses and the self-employed by subtracting operating and capital expenses from total income
State income tax: Most states have income tax, but Alaska, Florida, Nevada, South Dakota, Tennesee, Texas, Washington and Wyoming do not. New Hampshire is currently phasing out their income tax program.
What is income tax?: What it is and how much you have to pay
Learn more: Does your state have flat, graduated or no income tax?
Companies can deduct full cost of business meals
Companies can deduct the entire cost of meals and beverages purchased from a restaurant in 2022 thanks to a special tax break that incentivized employees to get back into the office. Payment or billing had to take place after Dec. 31, 2020 and before Jan. 1, 2023. Here's what the deductions do not apply to:
Food picked up at the supermarket, convenience store or vending machine
Food from a party store
Meals viewed as "lavish or extravagant"
Cafeteria food
How it works: Business meal deductions on 2022 tax returns explained
What is the IRS mileage rate?
Those who claim mileage deductions on their 2022 tax returns have last year's midyear bump to deal with -- the IRS increased some mileage rates for the second half of the year. The two mileage rates for 2022 are 58.5 cents per mile from January to June and 62.5 cents per mile from July to December.
So who can take a mileage deduction? This standard mileage rate applies to employees who are reimbursed by the federal government or businesses for out-of-pocket mileage expenses. Taxpayers who are members of the armed forces on active duty can also claim a deduction for moving expenses. Self-employed individuals can also claim business mileage on a tax return.
Mileage rate deductions: Your guide to medical mileage, self-employed deductions and more
Best way to receive 2023 tax refund
Opening an account to receive electronic payments is the easiest way for Americans to receive their 2023 tax refund, the IRS says. With eight out of 10 taxpayers opting for direct deposit, IRS encourages the electronic method because "there's no chance of it going uncashed, getting lost, stolen or destroyed."
To do this, select "direct deposit" on your tax software and type in the account and routing number associated with your bank account. If you're using a tax preparer, tell them you want direct deposit.
More tips: Setting up direct deposit, what to do if you don't have a bank account
How much is the 2023 Child Tax Credit?
The maximum tax credit per qualifying child is $2,000 for ages 5 and under and $3,000 for ages 6-17. In order to qualify for the Child Tax Credit, you must be a parent or guardian filing taxes in 2023, and your child or dependent must have a valid Social Security number.
Dependents must also provide no more than half of their own financial support during the year, must be properly claimed as a dependent and must have lived with you for more than half of the year, among other qualifications.
What to know: How to claim Child Tax Credit, plus full qualifications
What is FICA?
FICA stands for Federal Insurance Contributions Act; it's the federal payroll tax. A total of 7.65% of your gross wages goes to federal taxes, 6.2% to Social Security and 1.45% to Medicare. Your employer matches these percentages.
Self-employed individuals pay double the typical payroll tax because they don't have a larger employer to match it. The total tax rate is 15.3%, with 12.4% going to Social Security and 2.9% to Medicare.
FICA 101: Who is exempt, who has to pay additional taxes, who gets a refund
What's Tesla's tax credit for 2023?
Because the Inflation Reduction Act carves out a tax perk for those who buy electric and fuel cell vehicles, Tesla owners may be eligible for over $7,000 in tax credits. Tesla has several qualifying models, but they must have been bought on or after Jan. 1, 2023 and manufactured in North America. There are also income requirements, and filers must not have a modified gross income greater than:
$300,000 for married couples filing jointly
$225,000 for heads of households
$150,000 for all other filers
EV tax credit: What to know about 2023 and 2022 tax credits
How long should you wait before filing taxes?
Tax preparers and the IRS encourage you to file early, but there are certainly times when you may want to consider filing later or requesting an extension. Here are some situations where you may benefit from waiting to file until closer to the tax deadline:
You haven't received all your tax documents: K-1 and 1099-B forms may come later than the Jan. 31 deadline and can often have a significant impact on your tax return
Someone died and the trust or estate made a distribution to you: You might not get the information you need until too close to Tax Day
You're self-employed or own a small business: You can give yourself more time to fund your retirement account
You had an account at FTX, the bankrupt cryptocurrency exchange: With widespread alleged fraud, it might take a while to see if anything is recoverable from your account and how to handle it on your tax income
Waiting to file: Here's what experts suggest, plus info on FTX losses
This article originally appeared on USA TODAY: Tax filing tips: What to know to help get biggest refund on 2022 taxes