US Tax Day

4/17/2023

It is that time of year again – tomorrow, April 18^th, is the official US tax filing deadline for individuals and corporations.  While not a holiday that many outside the walls of the IRS look forward to, it is an important day to ensure compliance with federal and state laws. 

This year though, there are some added wrinkles to the tax season.  Due to the 15^th falling on a weekend and the observance of Emancipation Day today, the due date for tax filing was pushed back to April 18^th.  There is also a falling off of many of the COVID-related stimulus programs, several of which were administered through tax filings.  It will be important to work with your tax preparer to gain confidence that you are following the new and updated regulations and that you are still taking advantage of all potential COVID-related programs which are applicable to you. 

In somewhat better news, while the tax rates themselves have not changed this year, the income brackets for each tax rate have increased materially, as inflation continues to be a nationwide challenge.  For married taxpayers who file jointly, the high end of the 24% bracket range has increased to $340,100 from $329,850 in 2021.  Further, this same range is set to top out at $364,200 for 2023.  The 7.1% increase for 2022 to 2023 is one of the largest we have seen in the calculation ranges in many years.  Additionally, the 2022 standard deduction for those married filing jointly has increased to $25,900 for 2022 and $27,700 for 2023.  Who says inflation doesn’t have at least some benefits!

So, what are some details to keep in mind in regard to these changes?  The best thing right now is to review your income and expenses for the year to take advantage of all options for reducing your taxable income to bracket levels that make sense for you.  For example, if your income falls just above a higher rate bracket, you could consider contributing more to retirement accounts or donating more to charitable causes.  These steps may help avoid paying a higher marginal rate than is necessary, given your situation.  It is also important to consult with a tax professional or use tax preparation software to assist with accurate filing and take advantage of any available deductions or credits. 

In conclusion, while tax season may not be the most exciting time of the year, it’s important to stay informed about changes to tax laws and regulations.  The recent increase to tax brackets due to inflation serves as a reminder that even without a change in the underlying tax codes, tax rates are still subject to some changes, and it is crucial to stay up to date.  As always, it is important to consult with a tax professional if you have any questions or concerns.

Carey Blakley