As we approach the end of a bumpy 2022, it’s important for taxpayers to stay informed about the latest updates from the Internal Revenue Service (IRS) and how they can help position themselves for success in the new year.
Here are the top 5 IRS updates coming in 2023 that you should be aware of:
Increased penalties for noncompliance: The IRS has announced that it will be increasing penalties for taxpayers who fail to comply with tax laws and regulations in 2023. This includes failing to file tax returns on time, underreporting income, and failing to pay taxes owed. The increased penalties are intended to encourage taxpayers to be more diligent in their compliance efforts.
Changes to the individual income tax brackets: In 2023, there will be changes to the individual income tax brackets, with tax rates rising for those in the highest income brackets. The exact details of these changes are still being finalized, but it is expected that they will be based on changes to the overall economy and the cost of living.
Expansion of the earned income tax credit: The earned income tax credit (EITC) is a tax credit that is designed to help low-income earners reduce their tax burden. In 2023, the IRS plans to expand the EITC by increasing the income limits and providing a larger credit to eligible taxpayers. This will help to reduce the tax burden on those who are struggling to make ends meet.
Enhanced cybersecurity measures: The IRS has announced that it will be implementing enhanced cybersecurity measures in 2023 to protect taxpayers against identity theft and other types of cybercrime. This includes stronger passwords and two-factor authentication, as well as improved security protocols for online tax filing and account access.
Changes to the standard deduction: The standard deduction is a fixed amount that taxpayers can claim on their tax returns to reduce their taxable income. In 2023, the IRS plans to make changes to the standard deduction, potentially increasing it for certain taxpayers. This will help to make the tax filing process simpler and more straightforward for many Americans.
Overall, these updates from the IRS will have a significant impact on taxpayers in 2023. It’s important to stay informed about these changes and make any necessary adjustments to your tax strategy accordingly. By staying up-to-date with these updates, and consulting with the right tax professionals, you can ensure that you are in compliance with all tax laws and regulations, and minimize your tax burden.