2023 Taxes: 8 Things to Keep in Mind

With Tax Day right around the corner, here are eight things you should keep in mind as you prepare your 2023 taxes. If you have any questions or need help filing your 2023 taxes Warren Accounting is here to help you.

1. Income tax brackets shifted.

There are still seven tax rates (brackets) but the income ranges for each have changed slightly to account for inflation. The following tax rates and income ranges will apply for 2023.

2. Slight increase to the standard deduction.

The standard deduction increases to $13,850 for single filers and married couples filing separately. Single head of household filers, who are generally unmarried with one or more dependents, rises to $20,800. And the standard deduction for married couples filing jointly increased to $27,700.

3. The Child Tax Credit could provide a tax break.

Tax credits are normally better than deductions. Credits reduce the tax you owe dollar for dollar and deductions reduce how much of your income is subject to being taxed. The Child Tax Credit is $2,000 per child under age 17. The credit is also subject to a phase-out starting at $400,000 for joint filers and $200,000 for single filers. For other qualified dependents, you can claim a $500 credit.

4. Itemized deductions are mostly the same.

For many filers, taking the higher standard deduction saves them the hassle of keeping track of their receipts. However, if you have a large amount of tax-deductible expenses, it may be beneficial for you to itemize. The rules for itemized deductions have not changed much, but we would like to point them out.

Local & State Taxes: The deduction for state and local income taxes, property taxes, and real estate taxes is $10,000.

Mortgage Interest: The mortgage interest deduction is limited to $750,000 of indebtedness. But if you had $1,000,000 of home mortgage debt before December 16, 2017, you will still be able to deduct the interest on that loan.

Medical expenses: Medical expenses must exceed 7.5% of adjusted gross income (AGI) can be deducted in 2023.

Charitable donations: The annual income tax deduction limits for gifts to public charities are 30% of AGI for contributions of non-cash assets—if held for more than one year—and 60% of AGI for contributions of cash. If you give both can and non-cash assets, the overall limit is generally 50% of AGI.

Miscellaneous deductions: No miscellaneous itemized deductions are allowed.

5. 401(k) and IRA limits are slightly more.

Contribution limits for the traditional IRA and Roth increased slightly from 2022. Individuals can contribute up to $6,500 to an IRA. If you are age 50 and older, you qualify to make an additional $1,000 catch-up contribution. In addition, the contribution limits for tax-deferred 401(k)s and Roth 401(k)s increased to $22,500. And, if you are age 50 or older, you qualify to make an additional $7,500 catch-up contribution.

If you are in the position to do so, consider maxing out your contributions. By doing this you are boosting your retirement savings, and it could also provide a possible tax deduction.

6. You can save more in your health savings account (HSA).

The maximum contribution to an HSA is $3,850 for an individual (up $50 from 2021) and $7,750 for a family (up $100). People aged 55 and older can contribute an additional $1,000 catch-up contribution.

7. The alternative minimum tax (AMT) exemption is higher.

Until the AMT exemption enacted by the Tax Cuts and Jobs Act expires in 2025, the AMT will continue to affect mostly households with incomes over $500,000. The AMT exemptions are $81,300 for single filers and $126,500 for married taxpayers filing jointly. The phase-out thresholds are $1,156,300 for married taxpayers filing a joint return and $578,150 for all other taxpayers. (Once your income for the AMT hits the phase-out threshold, your AMT exemption begins to phase out at 25 cents for every dollar over the threshold.)

8. The estate tax exemption increased.

The estate and gift tax exemption rose to $12,920,000 for 2023. The higher exemption, set to expire at the end of 2025,  could be cut in half at that time if Congress does not act.

The annual gift exclusion, which allows you to give money to your loved ones each year without incurring any tax liability or using up any of your lifetime estate and gift tax exemption, increases to $17,000 per recipient (up $1,000 from 2022).

Your Tax Return Preparation Checklist

Here is a list of some of the most common documents needed to prepare a tax return. Before you begin to prepare your income tax return, go through the following checklist. Not every category will apply to you, so just pick those that do, and make sure you have that information available. You’ll be surprised how much time you’ll save by organizing your information ahead of time.

And remember, if you’ve had any life changes, chances are the documents you will need for your taxes have changed too!

Personal Information

-Social Security numbers and dates of birth for everyone on your tax return

-Copies of last year’s tax return for you and your spouse (helpful, but not required)

-Bank account number and routing number, if depositing your refund directly into your account

Income Information

-Wage statement (W-2)

– Unemployment statement (1099-G)

-Pension and IRA income (1099-R)

-Social Security income (1099-SSA)

-Interest, dividends, and income from sales of stock or property (1099-INT, 1099-DIV, 1099-B, 1099-S)

-HSA distributions (1099-SA)

-State income tax refund from prior year (1099-G)

-Alimony received

-Business or farming income – profit/loss statement, capital equipment information

-Prior year installment sale information – Forms 6252, principal and interest collected during the  year, SSN and address for payer

-Miscellaneous income: jury duty, gambling winnings, Medical Savings Account, scholarships, etc.

Credits & Deductions

-Student loan interest paid (1098-E)

-College tuition, fees, and books (1098-T, cashier’s office statement)

-Childcare expenses (need provider’s name, address, and EIN or SSN)

-Medical expenses (unreimbursed insurance, doctor, healthcare facility, and prescription costs)

-For teachers: Canceled checks or receipts for expenses paid for classroom supplies, etc.

-Taxes paid (personal property/vehicle taxes, estimated tax payments made during the year)

-Real estate taxes paid, and mortgage interest paid (1098)

-Charitable donations (receipts for cash and non-cash donations) – even if you don’t itemize

-Expenses related to any 1099-MISC income (receipts, mileage logs, etc.)

-Advance Child Tax Credit amounts received (IRS Letter 6419)

Information Documents

-5498 series forms showing contributions to HSAs, IRAs, etc.

-Bank information for direct deposit of refunds (account and routing numbers)

-Health insurance coverage (1095-A, 1095-B, or 1095-C depending on circumstance; must have 1095-A if anyone in the tax household received Marketplace Insurance)

-IRS notice detailing third stimulus payment (1444-C)

Rental Property

-Record of income (1099-MISC, checkbook register, bank statements, etc.)

-Record of expenses (repairs, cleaning, travel to property, mortgage, insurance, utilities, etc.)

-Depreciation record (cost of assets, date placed into service, prior depreciation taken)

-Documents related to PPP loan and forgiveness and/or EIDL advance and loan


-Record of income (1099-NEC, 1099-K, receipt book, bank statements, etc.)

-Record of expenses (home office, inventory costs, advertising, fees and taxes paid, travel, etc.)

-Depreciation record for any assets (cost, date placed into service, prior depreciation taken)

-Documents related to PPP loan and forgiveness and/or EIDL advance and loan

Once you have all your documents together, give us a call and let Warren Accounting Group help you file your 2023 tax return. We’re an independent, locally owned accounting and bookkeeping service offering a full range of services and strategies to help businesses and individuals maximize resources and minimize tax liabilities. Our experienced staff is knowledgeable about current tax laws, give us a call and let us put our experience to work for your family or business, (252) 827-5259!

Importance of Tax Preparation

Importance of Tax Preparation

Tax season can be a stressful time, but when you have the right strategies in place, it doesn’t have to be. Proper tax preparation is not only about compliance, but it is an opportunity to reduce your financial burden and maximize your savings. Here’s why tax preparation is so important.

Benefits of Proper Tax Preparation

There are many benefits to proper tax preparation. First, it ensures that you are compliant with tax laws and regulations, which can help you avoid potential penalties or legal issues. Second, you can maximize your tax deductions and credits, which will ultimately reduce your tax liability and increase your refund, or it can help minimize your payment. When you organize your financial documents and records, preparing your taxes is easier and helps decision-making throughout the year. It can also provide you with a clear overview of your financial situation, which enables you to identify areas of improvement, so you make better informed financial decisions. Finally, accurate tax preparation saves you time and stress during the filing process and minimizes your chances of errors or omissions.

Key Steps in Tax Preparation Process

Tax preparation involves several steps to ensure the process goes smoothly. Gather all the necessary financial documents, such as W-2 forms and receipts, to ensure accurate reporting. Next, organize and categorize your income and expenses, this will make it easier to calculate deductions and credits. Review the tax laws and regulations to see if there are any changes that may affect your filing. You should also double-check all calculations to ensure you didn’t miss any eligible deductions or credits. And lastly, file your taxes on time to avoid penalties. You can enjoy peace of mind knowing that your taxes were well prepared and filed on time.

Common Mistakes to Avoid in Tax Preparation

When it comes to tax preparation, avoiding common mistakes is key. Making errors on your returns can lead to penalties, audits, or even legal consequences. One common mistake is failing to keep accurate records. Another mistake you will want to avoid is failing to report all sources of income. Additionally, if you incorrectly claim deductions or credits red flags could be raised triggering greater scrutiny. You should also be aware of filing deadlines. Procrastination and late filings can lead to penalties. And the last thing you need to be sure to do is to review your tax return for accuracy before submitting.  If you are mindful of these common mistakes, you are sure to avoid unnecessary complications.

Tools and Resources for Efficient Tax Preparation

When it comes to efficient tax preparation, tools and resources are key – and they can help simplify the process and ensure accurate filings. You can use tax software to help guide you through the process, and tax calculators can also be helpful in estimating your tax liability. The IRS website also provides many resources, including forms, publications, and online tools. An electronic filing system or tax preparation checklist can help you streamline the filing process as well.  Finally, hiring a tax professional will provide you with expert guidance and advice for complex tax situations. When you use tools and resources such as these, you can make tax preparation less stressful.

Hiring the Professionals at Warren Accounting Group for Expert Tax Preparation

When it comes to tax preparation, hiring professionals is key. Warren Accounting Group has the expertise and knowledge to handle complex tax laws and regulations, ensuring that your taxes are prepared accurately. We can help you maximize your deductions and credits, potentially saving you money. We stay up to date on the latest tax laws, so you don’t have to worry about missing any crucial updates. Additionally, we can navigate any potential audits or tax disputes, providing you with peace of mind. By hiring the tax professionals at Warren Accounting Group for individual or business tax preparation, you can save time, reduce stress, and ensure that your taxes are done right.