Key Takeaways
- The federal income tax deadline for most Americans in 2023 is April 18, though state holidays may delay the deadline for people living in some localities.
- The end of COVID-19 stimulus policies may increase the amount of taxes you owe or reduce your refund in 2023.
- You should receive your tax refund within 21 days if you file electronically, but it typically takes longer if you file a paper return.
How Do Taxes Work?
In the U.S., federal income tax is a progressive tax system. The more you make, the larger the percentage of your income you pay in taxes. Your income level puts you into one of seven tax brackets. The percentage at which your income is taxed is called your tax rate.
Each year, new tax laws change how much you must pay. They also offer new tax breaks, including tax deductions, tax credits and tax exemptions.
Some changes to the federal tax code — made in response to the COVID-19 pandemic and the economic turmoil it has fueled — are being rolled back in the 2023 tax season.
But underfunding and short staffing at the Internal Revenue Service, the federal agency that collects and processes income taxes, has rolled over from 2022.
Fortunately, you can expect faster results if your return is simple and filed electronically.
“I would recommend people file electronically, absolutely file electronically if you’re expecting a refund,” Donald Williamson, CPA and director of the master’s in taxation program at American University’s Kogod School of Business, told Annuity.org.
If you’re a W-2 employee and either received a large tax refund or had a large balance due, it’s probably a good idea to adjust your tax withholding for the coming year. You can do this by submitting an updated Form W-4 to your employer. The IRS also has a good withholding estimator tool on its website that you can use to plan for any additional withholding, which can be useful if you have a side hustle with 1099 income in addition to your W-2 job.
Peggy James, CPACertified Public Accountant
2023 Tax Season Deadlines
For most individuals, April is filled with income tax deadlines — not just for filing taxes, but also for squaring up contributions to and withdrawals from your retirement accounts for tax purposes.
Typically, the federal income tax filing deadline is April 15. In 2023, that falls on a Saturday, with a Monday holiday — Emancipation Day, a local holiday in Washington, D.C. — creating a three-day weekend. So, federal offices including the IRS will be closed, shifting the deadline to the next business day — Tuesday, April 18.
Other state or local holidays may also push the deadline back a day in some localities.
Income Thresholds: Who Has To File Income Taxes?
Not everyone has to file an income tax return every year. You may not be required to file taxes if your income for the year falls below certain thresholds. These thresholds vary based on your age and filing status.
Minimum Thresholds To File Income Taxes on 2022 Income
| Single Filing Status | $12,950 if under age 65
$14,700 if age 65 or older |
| Married Filing Jointly | $25,900 if both spouses are under age 65
$27,300 if one spouse is under age 65 and one is age 65 or older $28,700 if both spouses are age 65 or older |
| Married Filing Separately | $5 dollars for all ages |
| Head of Household Filing Status | $19,400 if under age 65
$21,150 if age 65 or older |
| Qualifying Widow/Widower Filing with Dependent Child | $25,900 if under age 65
$27,300 if age 65 or older |
In most cases, if your income was entirely from Social Security benefits, you shouldn’t have to file a tax return. But there are some exceptions.
The IRS website has a tool to help you decide if you need to file a tax return.
What You Need To File Your 2022 Tax Return
Maintaining tax records is a cornerstone of personal finance skills. You should receive the forms and tax documents you’ll need to file your tax return ahead of tax season, typically between December and the end of January. You’ll need to save the paperwork until you’ve received everything required to begin your tax return.
You should also be aware of any new documents each year before filing your taxes.
Steps for Filing Your Taxes
Once you have your forms and records from the previous year compiled, most people can file their taxes in five basic steps.
Determining Your Filing Status
It’s important to choose the correct filing status when preparing your taxes. The status you select will affect your tax bill or any refund.
Depending on your situation, you may qualify for multiple statuses. In that case, choose the status that allows you to pay the least amount of tax.
- Single
- If you are not married — including if you are divorced or legally separated under your state’s law.
- Married Filing Jointly
- If you are married, and you and your spouse file a joint return.
- Married Filing Separately
- If you are married, you and your spouse can choose to each file your own separate returns. This can sometimes mean you’ll pay less tax than if you filed jointly. It can help to prepare your returns both ways to see which route saves you the most money.
- Head of Household
- If you are not married but qualify by having paid more than half the cost of keeping up a home for yourself and at least one qualifying person. It’s important to check the IRS rules for the head of household to make sure you qualify before claiming this status.
- Qualifying Widow or Widower
- If your spouse died within the past two years, you could use joint return tax rates and the highest standard deduction amount. To claim this status, you must meet certain other requirements, including claiming a child, stepchild or adopted child as your dependent.
Filing Statuses
Choosing How To Prepare and File Your Taxes
There are three major ways to prepare your taxes and two options for filing your completed return.
You can file electronically yourself if you use a tax software or file online. Your accountant or other tax preparer can file electronically for you if you choose to use in-person tax preparation.
Preparing Your Taxes
Determining the best way to fill out your tax forms accurately and completely depends largely on how complicated your finances are.
- Do It Yourself
- This means sitting down with your records and filling out a paper Form 1040 by hand. Unless you have extremely simple finances, this can be difficult. But if you have income from one employer, take the standard deduction and have no major life changes, this option may work for you.
- File On Your Computer
- This route is an option if you have more complex finances. Software companies such as TurboTax, TaxCut and TaxAct provide you with up-to-date prompts to make sure you don’t miss savings or fail to report income that could cost you. They can provide live, human assistance should you need it. There are also free online options from software companies and the IRS Free File tool if your income fits certain criteria.
- Sit With a Tax Professional
- If your finances are complicated — or if you prefer dealing with someone in person — this may be the best route to consider. A tax accountant or other tax professional can deal with major life changes or help you make sense of lengthy lists of itemized deductions. They can often find tax savings unique to your situation.
Options for Preparing Your Taxes
2022 Tax Brackets and Tax Rates
Progressive rates are set using tax brackets. A tax bracket is a range of income taxed at a certain rate.
The tax bracket within which your taxable income falls — along with your filing status — determines the tax rate you will pay on each portion of your income.
2022 Tax Rates and Tax Brackets by Filing Status
| Tax Rate | Single Filers & Married Filing Separately | Married Filing Jointly & Qualifying Widow(er) | Head of Household |
|---|---|---|---|
| 10% | $0 to $10,275 | $0 to $20,550 | $0 to $14,650 |
| 12% | $10,275 to $41,775 | $20,550 to $83,550 | $14,650 to $55,900 |
| 22% | $41,775 to $89,075 | $83,550 to $178,150 | $55,900 to $89,050 |
| 24% | $89,075 to $170,050 | $178,150 to $340,100 | $89,050 to $170,050 |
| 32% | $170,050 to $215,950 | $340,100 to $431,900 | $170,050 to $215,950 |
| 35% | $215,950 to $539,900 | $431,900 to $647,850 | $215,950 to $539,900 |
| 37% | $539,900 or more | $647,850 or more | $539,900 or more |
Tax brackets are adjusted each year based on inflation. This means, the top end of your income may have shifted into a new tax bracket since you last filed taxes. Receiving a raise in the past year may also mean that the upper end of your income moved into a higher bracket.
How Your Taxes Are Calculated
If you are in a particular tax bracket, it doesn’t mean that you will pay that rate on all your income. Each part of your income is taxed on the rate for that amount of your total income.
For example, if you make $43,000 and file under single status, you’d be in the 22% bracket. But you’d pay only 10% on the first $10,275 of your income, 12% on the next $10,276 to $41,775 of your income and 22% only on your income over that.
Tax Deductions vs. Tax Credits
Tax deductions and tax credits both reduce how much you must pay in income taxes — but in different ways.
- Tax Deduction
- A tax deduction lowers your taxable income which, in turn, can lower the tax rate used to determine how much you have to pay in taxes. The benefit of a tax deduction depends on your tax rate. Tax deductions can give you a larger refund on the money withheld from your paycheck.
- Tax Credit
- A tax credit is a reduction of your tax bill by a specific dollar amount. Because they directly lower the amount of taxes you owe, they are generally more favorable than tax deductions. Tax credits can be refundable, partially refundable or nonrefundable. While nonrefundable tax credits can reduce your tax bill to zero, refundable tax credits can provide you with a tax refund.
Differences Between Tax Deductions and Tax Credits
You may be eligible to claim certain deductions, credits or both. If you have to choose between one or the other, you should carefully consider which will be more beneficial to you. The choice can depend on your income. Calculate what each deduction will save you or consult with a tax professional.
Standard vs. Itemized Deductions
You have the choice of taking a standard deduction or itemizing your deductions when filing your taxes. You should choose the method that saves you the most on your tax bill or maximizes your refund.
- Standard Deduction
- The standard deduction for the 2022 tax year reduces your taxable income by $12,950 for single filers and married filing separately, $25,900 for joint filers and $19,400 for those filing as head of household.
- Itemized Deductions
- When itemizing deductions, the IRS determines the types of expenses you are allowed to claim. You can calculate the amount of your itemized deductions by using Schedule A (Form 1040) from the IRS. You will want to make sure that your qualified deductions add up to more than the standard deduction before deciding to itemize.
Differences Between Standard and Itemized Deductions
The standard deduction is a flat amount set by the IRS. To claim it, you simply must enter the correct amount of the deduction on your tax return. The standard deduction is different for each filing status.
Itemized deductions are the amount you spent on deductible expenses allowed by the IRS. These reduce your AGI, meaning you’ll pay taxes on a smaller amount of your income.
It makes sense to itemize your deductions if the total of your deductions is more than the standard deduction for your filing status.
This may happen if you have high out-of-pocket medical expenses, large amounts of interest payments on your mortgage, uninsured theft or casualty losses, or if you claim other qualified deductions.
Tax Season 2023: Biggest Changes to 2022 Taxes
The end of COVID-19 stimulus checks and tax breaks, along with other changes to tax law, will affect how millions of Americans file their 2022 tax returns.
These can affect your tax bill or return. But at the same time, there may be other tax credits you may be eligible for.
Form 1099-K Rules Changed
If you are a freelancer or gig worker, you may have some added paperwork to file your 2022 taxes.
“It’s very common for gig workers — who drive for DoorDash or Uber, for example — and small-business owners to accept business payments via Venmo, PayPal and Cash App.” Arthur Bartlett, an attorney at the Charlotte Center for Legal Advocacy told Annuity.org.
The minimum threshold for businesses reporting payments was lowered from $20,000 to just $600. But the IRS announced in January 2023 that it would delay the requirement to report payments under $20,000 until January 1, 2024.
“Gig workers, small-business owners and anyone who receives payments from TPSOs for business purposes should start logging transactions now to start preparing for 2024,” Bartlett said.
If you collected less than $20,000 from any one processor or had fewer than 200 transactions, you won’t need a form 1099-K from that processor.
Tax Credits Returning to Pre-COVID-19 Levels
Some taxpayers can expect significantly smaller refunds than in recent years due to changes in pandemic-related tax credits and breaks, says Kasia Strzelczyk, an IRS Enrolled Agent for 1040 Abroad, a company that specializes in helping Americans file their tax returns while living abroad.
“The America Rescue Plan increased the Child Tax Credit to $3,600 for children under six and $3,000 for children under 18, and made the credit fully refundable,” Strzelczyk told Annuity.org. “This year, the credit will return to its nonrefundable status and be reduced to $2,000 per child under 17.”
Taxpayers with no children who qualify for the Earned Income Tax Credit (EITC) received about $1,500 in 2021. That drops to $500 for 2022.
You may also get a smaller tax refund because the federal government stopped issuing stimulus checks — officially called Economic Impact Payments.
“The good news is that eligible Americans who haven’t claimed these checks or didn’t receive the full amount can still claim their stimulus money through the Recovery Rebate Credit,” Strzelczyk said. “Single filers may be eligible to receive up to $3,200.
If you’re married and filing jointly, you may be able to claim up to $6,400. You may be eligible for even more if you have kids or adult dependents.
Changes to Charitable Deductions
During COVID, you could take up to a $600 charitable donation tax deduction on your tax return if you took the standard deduction.
For your 2022 taxes, you can no longer take the extra $600 if you claim the standard deduction. Charitable deductions can only be claimed if you choose itemized deductions when filing your taxes.
Premium Tax Credit Eligibility
The premium tax credit — or PTC — is a refundable tax credit that helps eligible individuals and families cover health insurance premiums.
The American Rescue Plan Act temporarily expanded the credit to cover more Americans in 2021 and 2022. The act allowed taxpayers with household income above 400% of the poverty line to qualify for the credit.
The rule is back in place, but people earning above the mark may still be eligible for the premium tax credit on their 2022 taxes.
Clean Vehicle Tax Credit Eligibility Rules
If you bought a new electric vehicle (EV) in 2022 or before, you may be able to claim a tax credit of up to $7,500. There are several IRS rules that apply.
“Previously, there were manufacturer caps on qualifying vehicles, now that it has been removed, you have seen car manufacturers lower prices so that their vehicles qualify,” Braxton Godderidge, a CPA with CMP, an accounting firm in Logan, Utah, told Annuity.org.
“This is a non-refundable credit, and you can’t carry it forward, so before factoring the credit into the purchase price of the vehicle, make sure you are going to be able to take the full credit on your tax return.”
If you bought an EV before 2022, you may be able to claim a credit by filing an amended return for the year you took possession of the vehicle.
If you bought a two-wheeled EV after 2021, you can’t claim the credit, since it expired in 2022. But if you purchased one in 2021 and didn’t place it in service until 2022, you may be eligible for the credit.
Getting Your Tax Refund or Paying the IRS
The IRS estimates that you should get your refund within 21 days if you are an electronic filer. If you filed a paper return, it would take longer.
If you haven’t received a refund, you can check for problems at the IRS “Where’s My Refund?” webpage.
What You’ll Need To Check Your Refund’s Status
- Your Social Security number or individual taxpayer identification number (ITIN)
- Your filing status
- The exact amount of your refund
Source: Internal Revenue Service
You should not call the IRS unless it’s been 21 days or more since you filed your return electronically or if the “Where’s My Refund?” website instructs you to call.
If you owe taxes, the IRS offers several payment options. You can pay your tax bill immediately, later in one lump sum or arrange installment payments.
- Electronic Funds Withdrawal
- Pay using your linked bank account when you e-file.
- Direct Pay
- Automatically pay from a checking or savings account.
- Credit or Debit Card
- Pay using a debit or credit card online, by phone or using a mobile device.
- Pay Cash
- Pay in cash by visiting an IRS participating retail partner.
- Monthly Installment Payments
- Pay in installment payments only if you have filed all tax returns first and qualify for an installment plan through the IRS Online Payment Agreement.
Federal Income Tax Payment Options
Source: Internal Revenue Service
In some cases, your tax return may be audited. This does not automatically mean that there is a problem with your tax return. Many times, it’s simply a review to make sure your accounts and information were reported correctly.
The IRS selects some returns randomly based on a statistical formula and computer selections. Others may be audited to make sure that the information in their returns matches information provided by business partners or investors.
Understanding State Income Taxes
State income taxes vary widely by state. States are free to set their own tax rates and tax brackets, and choose what types of income to tax. Some states decide not to tax any income at all.
State Income Tax Facts
- There are 43 states, as well as the District of Columbia, that have some type of income tax.
- There are 7 states that do not levy any state income taxes: Alaska, Florida, Nevada, South Dakota, Tennessee, Texas and Wyoming.
Source: Tax Foundation
It’s typically best practice to file your state income taxes at the same time as your federal income taxes, but some states may have a later filing deadline than the federal deadlines.
You can check for specifics on deadlines, like where to obtain forms, and how and where to file your state income taxes, through your state’s tax agency.
Featured Experts
Director, Master’s of Science in Taxation Program, Kogod School of Business, American University
Donald Williamson, MBA, JD, LL.M, CPA
Donald Williamson is the Kogod Eminent Professor of Taxation and teaches multiple subjects related to taxation. He is also director of the Master’s of Science in Taxation degree program and the executive director of the Kogod Tax Center, a research institute focusing upon small business interests. He previously served as a senior manager for international taxation at KPMG in Washington, D.C. Williamson holds MBA and JD degrees from Cornell Univesrity and has published over 75 articles in professional and academic journals.
Certified Public Accountant, CMP Certified Public Accountants
Braxton Godderidge, CPA, M.A.
Braxton Godderidge is a CPA focusing on individual and business tax issues in the Logan, Utah office of CMP Certified Public Accountants. He earned his bachelor’s and master’s degrees in accounting at Southern Utah University. Prior to joining CMP in 2021, he worked with an accounting firm in Phoenix, Arizona.
Co-Director, North Carolina Low Income Taxpayer Clinic & Legal Services for the Elderly
Arthur Bartlett, J.D.
Arthur Bartlett is an attorney at the Charlotte Center for Legal Advocacy. He serves as the co-director for the center’s North Carolina Low Income Taxpayer Clinic and Legal Services for the Elderly. He holds a B.A. in political science and a J.D. from the University of Michigan Law School. Prior to joining the center in 2007, he worked for private law firms in New York and North Carolina specializing in the Employee Retirement Income Security Act of 1974 (ERISA). It is a federal law that sets minimum standards for most retirement and health plans in the private industry to provide protection for people enrolled in those plans.
IRS Enrolled Agent, Tax Specialist and Certified Accountant, 1040 Abroad
Kasia Strzelczyk
Kasia Strzelczyk is a certified accountant and IRS Enrolled Agent with over eight years of experience working with U.S. citizens and taxpayers living abroad. With a deep understanding of the unique financial challenges faced by expats, Kasia is dedicated to helping clients navigate complex tax laws and regulations.
