The 2023 tax filing season for 2022 tax returns should be a relatively normal tax season compared to recent years. Most of the COVID relief provisions, such as the economic stimulus payments, recovery rebate credit, and the expanded child tax credit with advance payments, had expired for 2022. Also, many of the new energy-related tax provisions in the Inflation Reduction Act are not effective until 2023 or later. Still, there are a lot of changes for the 2023 tax filing season.
Return due date
The due date for 2022 tax returns is April 18, 2023, due to April 15 falling on a weekend and Emancipation Day in the District of Columbia on April 17.
Start of tax filing season
The IRS has announced that tax filing season will commence on January 23, 2023, closer to normal than during the peak of COVID.
Form 1040 changes
There are some surprising changes to the 2022 Form 1040. The question about involvement with virtual currency on the 2021 Form 1040 has been revised to refer to digital assets with this question:
“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)?”
In addition, line 1 on Form 1040 has been expanded from one line into ten separate lines:
1a. Total amount from Form(s) W-2, box 1
b. Household employee wages not reported on Form(s) W-2
c. Tip income not reported on line 1a
d. Medicaid waiver payments not reported on Form(s) W-2
e. Taxable dependent care benefits from Form 2441, line 26
f. Employer-provided adoption benefits from Form 8839, line 29
g. Wages from Form 8919, line 6
h. Other earned income
i. Nontaxable combat pay election
z. Add lines 1a through 1h
A new checkbox has been added to line 6c for those taxpayers who elect to use the lump-sum election method for their social security benefits.
And lastly, several deductions and credits that were available on 2021 returns expired as of 12/31/2021 (and were not renewed by congress). The items related to the expired deductions and credits – and removed from the 2022 Form 1040 – are:
- Charitable deduction for non-itemizers
- Mortgage insurance premium deduction
- Credit for sick and family leave for self-employed individuals
- Recovery rebate credit
- Health coverage tax credit
- Expanded child tax credit
- Expanded dependent care credit
- Expanded earned income tax credit for taxpayers without a qualifying child
Form 1099-K
One of the most significant changes for 2022 was expected to be the change in the threshold for filing Form 1099-K by third-party payment processors.
For 2021 taxes, the threshold was $200,000 or 200 transactions, while for 2022 taxes, the threshold was changes to $600.
However, on December 23, 2022, the IRS delayed the form 1099-K expanded reporting requirement for third-party payment processors until 2023 tax returns, much to the relief of may tax professionals.
Inflation Reduction Act
The Inflation Reduction Act preserved and extended a number of individual and business energy-related tax provisions.
For individuals, a pre-existing energy-efficient home improvement credit was extended through 2022 and expanded for 2023 and beyond. The percentage under the residential clean energy credit for solar and wind installations for 2022 was increased from 26% to 30%.
For the new clean vehicle credit, the requirement that the place of final assembly is in North America became effective starting August 16, 2022. The requirement is subject to an exception for written purchase contracts entered into before August 16, 2022.
Increased IRS funding
The increased funding for the IRS enacted as part of the Inflation Reduction Act is expected to improve IRS taxpayer services during the 2023 tax filing season, which should help the filing season run more smoothly.
Standard mileage rates
Due to inflation in 2022, the IRS made an unusual mid-year adjustment in the standard mileage rates, requiring separate computations for mileage before July 1 and mileage after June 30, 2022.
Restaurant business meals deduction
2022 is the last year to claim the 100% business meals deduction for restaurant-provided meals.
Forms created or revised for the 2022 tax year
According to a report from the Department of the Treasury Inspector General for Tax Administration, the IRS estimates that tax law provisions impacting the 2023 tax filing season will require creating or revising 24 tax forms, 29 tax form instructions, and three publications before the start of the filing season.