Best Ways to Prepare Tax Season in 2023

Households in the United States are looking forward to filing their 2022 tax returns and hopefully netting large refunds to help offset the rising costs of inflation. Tax season 2023 is upon us and thankfully there are many tax filing companies ready and waiting to help consumers file their tax returns with the IRS.

According to recent statistics with efile.com, about 92% of 2022 tax returns were filed electronically, and almost 67 million of those returns were self-prepared using various software. As you prepare your 2022 tax return this year, be sure you’re working with the best tax software program for your specific needs.

Not sure about the best way to file your taxes in 2023? We’ve collected feedback from online reviews to help you identify what you need to know. 

• Tax Preparation in 2023
• Filing Taxes Online
• Recent Tax Law Changes
• 2023 Stimulus Checks and Tax Return

How to Prepare for Tax Season 2023?

If you want to file your income taxes on time, you’ll need to file by the tax deadline, Tuesday, April 18, 2023. Tax filing season 2023 is underway, and the IRS is accepting IRS form 1040 as of January 23, 2023. As tax season kicks off, remember that you can file your taxes or you can file an extension if you need more time. If you file an extension by April 18, 2023, your tax return won’t be due until October 16, 2023.

Other entities have different tax filing deadlines.

• The deadline to file partnership taxes (Form 1065) is March 15, 2023. The extended partnership deadline is September 15, 2023.
• C corporations must file taxes (Form 1120) by April 18, 2023. The extended deadline for C Corporations (Form 7004) is October 16, 2023.
• S corporations must file taxes (Form 1120S) by March 15, 2023. The extended deadline for S corporations (Form 7004) is September 15, 2023.

The abovementioned tax forms are available here.

Wondering how to prepare for tax season? Your first steps are to be sure you understand the process. Here are the basic steps to help you prepare for the coming tax season. 

1. Gathering tax documents

The forms to complete can be mailed out. They can be also available electronically. Many online tax preparation services have forms available near the start of January. 

2. Estimation and paying tax owed

Look through your tax forms from the previous year to check whether it is likely that you owe any tax. If you fail to pay the tax you owe, you risk interest and penalties. April 18th is the date when penalties start accruing. The IRS will charge interest on late or unpaid taxes, regardless of cause. Remember, as you earn more money your tax brackets will shift and you’ll owe more taxes. The 2023 tax brackets range from 10% to 37%.

The tax return dates in 2023 are the same regardless of whether you owe taxes or if the IRS owes you a tax refund. But there is greater urgency if you owe the government tax funds. The government will not charge fees if you fail to claim what they owe you. They will certainly charge penalties and interest if you fail to send what you owe them. A 2023 tax refund estimator can help determine if you are likely to owe money so you can plan accordingly.

3. IRA (individual retirement account) contributions information

Form 5498: IRA Contributions Information reports your IRA contributions to The Internal Revenue Service (IRS). Contribution limits are $5,500 or $6,500 if you are age 50 or older, for both traditional and Roth IRAs (a type of IRA that lets an investor save up to a certain amount of after-tax dollars each year. The earnings in the account grow tax-free, and distributions taken after age 59½ (if the account has been open for at least 5 years) are exempt from taxes.

You will get a tax break for contributing to certain types of IRAs, and you can make contributions to your IRA after the end of the calendar year. For example, you can contribute to your IRA in March of 2023 and apply the tax savings on your 2022 tax form. You can make IRA contributions online with companies like Fidelity. Visit the website at https://fidelity.com/. Fidelity offers the following financial products:

• You can sell a Fidelity mutual fund in a mutual fund account and use the cash amount to contribute to a mutual fund IRA and buy a mutual fund.
• You can sell a Fidelity mutual fund in a mutual fund account and contribute the cash amount to a brokerage IRA.
• You can use cash from a brokerage account to contribute to a mutual fund IRA and buy a Fidelity mutual fund.
• You can contribute cash from a brokerage account to a brokerage IRA.

4. Filing for an extension

 If there is a situation when you may miss a deadline for filing taxes or make mistakes because you're in a rush, you should request an extension. In order to get a 6-month extension, there are different forms:

• Partnerships, S Corporations, and C Corporations use Form 7004.
• Individuals use Form 4868.
• Nonprofit and charity organizations use Form 8868 to request a 3-month extension.

While filing tax returns and gathering the necessary documentation, you should also consider the following:

• Are you using the itemized deduction or a standard deduction? Itemized deductions are claimed on Schedule A of Form 1040, which must be attached to your annual tax return. It is usually claimed in case of state and local taxes, gifts to charity, home loan interest, tax preparation fees, medical and dental expenses. A standard deduction is a fixed dollar amount, based on your filing status and age, that the IRS lets you take off (deduct) from your taxable income. 
• Business expenses. You can claim certain items as business expenses during the year and justify them to the IRS.
• Donations and dues may be considered and claimed as a tax deduction. Add receipts to your documentation and provide information on how much you have donated.
• Finance documents. Bank e-statements, credit card e-statements, retirement account information put in a tax folder. You will need information and data to support the numbers used for your taxes.

5. Avoiding overpayment by accounting for life changes

Taxes are not static. Changes in your family or income situation impact your tax situation. When filing taxes, you should be prepared to document and provide information about the following:

• Changes to your marital status.
• Having a baby, or claiming dependents - reduces your tax rates, gives access to the Child Tax Credit, tax benefits like credits for education to the Earned Income Tax Credit.
• Educational expenses - The American Opportunity Credit and the Lifetime Learning Credit can help offset $2,000 or more of your qualifying educational expenses. If you're paying off a student loan, you can deduct up to $2,500 of your interest on your taxes. The cost to obtain certain professional certifications or designations can also be written off on your taxes.
• Retirement contributions and distributions.
• Inheritance is tax-free.
• Starting or finishing an expat assignment. Expats receive an automatic 2-month extension.

Tax preparation is a real challenge for most people who are not sure if they should seek professional assistance or do it themselves. Sometimes, it is better and easier to consult with a tax professional to learn what are state taxes and to pay your tax liability on time. There is a strong demand for tax preparation services because of the task complexity and importance.

There are many tax preparation companies on the market. It’s important to read tax reviews and tax complaints before committing to a company. By researching the experience of others, you may be able to avoid many of the more common frustrations or even tax scams.  

How to Choose Online Tax Software?

Tax forms can be complicated without some sort of financial assistance. The IRS offers a partnership with many companies to file simple tax returns online, which helps a large percentage of individuals file quickly and easily without needing to pay tax preparation fees.

Generally, the more complicated your financial situation, the more expensive your tax preparation will be. What you want to avoid is overpaying a company or feeling like you were taken advantage of. Large companies that have been around for decades often have quality control measures in place. Smaller companies that seem to materialize overnight might be more suspicious. But large or small, trouble can still show up.

You have several options when it comes to filing your taxes:

• Work with a certified accountant to file. This is a good option if you have a complicated situation involved multiple investments, overseas accounts, or business taxes. Accountants can have substantial tax preparation fees.
• Take advantage of free tax preparation software and services offered by various organizations in your area. These are often sponsored by groups like AARP or local churches.
• Use discount tax preparation services through dedicated companies like HR Block or Liberty Tax in the storefront or other locations.
• Use online tax preparation software to file taxes yourself with the online preparation service’s guidance. Many individuals find these online services to be efficient and low-priced or even free based on income.

The first three options above involve finding either paid or voluntary assistance with your taxes. This is where you can help yourself by reading tax reviews before committing to a company. Negative experiences described in tax reviews can help you choose a company that might be a better fit for you.

As you prepare to file taxes, consider the options available to help you in the process. Tax preparation software makes filing your return with the IRS quick and easy, but you want to be sure you make the right choice. 

Many companies are offering tax preparation software for consumers, but they aren’t all created equally. That’s why it’s important to read tax software reviews to be sure you’re paying for and using the right service for your specific needs. 

In an Equifax tax return review #4313652, one customer explains how things went wrong. According to the customer, they went to Equifax for tax preparation services. But instead of getting the refund the customer expected after filing a tax return, they received a letter from the IRS. 

The customer explained that they “called the IRS and according to them, they never sent me a letter.” At the time of the review, the consumer still has not received a refund despite paying the tax preparation fees for the completed service. 

Of course, you can file taxes yourself and skip the preparation companies. Check out the tax software reviews to find the best program to suit your needs and then, using your tax documents, enter the required information to complete the process. 

If you choose to file your taxes, you will simply create an account with an online tax company and enter the information from your own tax documents. There are many popular filing options including HR Block, Taxact, and Turbo Tax. If your tax return is simple, you may be able to file a free return. If you have a more complicated scenario, you will have to pay to use the updated version of the software to file.

You have the option to use the software independently, or you can pay for a bit of extra support to get answers or advice from the company’s representatives and tax professionals. Of course, even though the process of tax preparation using software should be simple, the reality can be more complicated for some individuals.

One frustrated customer didn’t complain about the tax software they were using to file his taxes, per se, but rather the reports generated by investment company Robinhood (review #4083179). When the consumer used the information printed on their Robinhood report in the tax software they chose, they wound up owing taxes on money they deposited in the account rather than profits from investments. They complain that it “makes absolutely no sense” and claim to “need someone to answer the customer service line!”

To avoid issues like these with online tax preparation software, you should always:

• Read tax service reviews about software on a website like www.pissedconsumer.com.
• Try out a demo version and read properly all the details about the product.
• Consider using the IRS Free File to prepare and file your federal income tax return for those who qualify or the IRS Free Fillable Forms for all taxpayers. These free tax preparation online resources are affordable and secure.
• Consider using the IRS Volunteer Income Tax Assistance and the Tax Counseling for Elderly programs which are developed to provide free tax help and e-file for taxpayers who qualify.

What happens if I don’t file my taxes?

You can be in trouble with the IRS. You may be audited and penalized for avoiding your taxes. Additionally, you may find yourself in legal trouble as well depending on how aggressively the IRS chooses to pursue your case. But there are good things that come from filing taxes as well.

Many things like future social security eligibility and stimulus checks are sent based on tax filings. Your next stimulus check may be tied to your tax return, which is one more good reason to file quickly and easily online.

Of course, you don’t have to file your taxes online. You have the option to complete the paper tax forms or pay to have someone else prepare them for you. But even most tax preparation companies or accountants use some form of online software.

In many households, it just makes sense to take advantage of the available tax software. After all, tax software is designed to maximize your return (or minimize your payment to the IRS).

How to Complain About Tax Return Fraud?

If you discover later that your tax preparer acted improperly, you can report a complaint using the following methods:

• First, know that how you report misconduct depends on how the IRS has notified you of a concern. You might be notified by mail or a notice through your software. In some cases, you may discover the problem and notify the IRS of mistakes yourself.
• If you received a notice or a letter from the IRS, complete Tax Return Preparer Fraud or Misconduct Affidavit Form 14157-A and Complaint: Tax Return Preparer Form 14157. Mail the IRS with all supporting documentation and a copy of the notice or letter to the address contained in that notice or letter. 
• If you did not receive a notice or a letter from the IRS, complete Tax Return Preparer Fraud or Misconduct Affidavit Form 14157-A and Complaint: Tax Return Preparer Form 14157. Mail them with all supporting documentation to the address where you would normally mail your Form 1040.
• If you suspect your identity was stolen, use Form 14039.
• If you want to report alleged tax law violations by an individual, a business, or both, use Form 3949-A. Submit to the address on the Form 3949-A.

Recent Tax Law Changes

Tax season 2023 will bring with it some changes. The updates the IRS has made to tax laws might change the amount you see in your tax return this year, which might surprise some filers. With tax filing season upon us, here are some of the biggest changes you can expect in 2023. Hopefully, your savings might offset any increase in your tax preparation fees. 

New tax brackets and withholding

There are new 2023 tax brackets already in effect, designed to counter inflation. The updated tax brackets are accompanied by new withholding guidelines. These limits have companies withhold less from paychecks. The tax laws updated the brackets to boost the amount of money individuals take home in their paychecks, but that might limit the amount they get back as tax returns. 

Higher standard deductions

The IRS also raised the standard deductions for this tax filing season. With a higher deduction, more of your taxes will be returned to you, helping to offset the tax complaints that the updated tax brackets might generate. The standard deduction for a single taxpayer is $13,850, which is up $900 in 2023. 

Higher limits on tax-deferred retirement accounts

You can now send more to your tax-deferred retirement accounts, like 401k, which reduces your taxable income. This will also help you to save more for retirement.

Increased contribution limits to your FSA

If you use a flexible savings account, you can now save more. The IRS now allows 2023 contributions of up to $3,050, up from $2,850 on this popular option for a tax credit. 

A slightly later tax deadline

The tax deadline to submit your forms to the IRS is slightly later. This year tax forms are due on April 18 instead of April 15. 

2023 Stimulus Checks and Your Tax Return

The final COVID stimulus checks were sent by the federal government back in 2021, meaning this tax season is not affected by federal stimulus payments. However, some states have continued to send stimulus checks tied to rising levels of inflation. These checks may impact your 2023 tax filing season. 

If you received any stimulus checks from your state government in 2022, that income may need to be declared on your tax forms for the federal or state government. As you prepare your tax return with reputable software, you’ll be asked about state stimulus checks if you live in one of the affected states. 

Your 2023 tax filing season may require reporting stimulus payments if you received checks in the following states:

• Alaska
• California
• Colorado
• Delaware
• Florida
• Georgia
• Hawaii
• Idaho
• Illinois
• Indiana
• Maine 
• Massachusetts
• Minnesota
• New Jersey
• New Mexico
• Oregon
• Rhode Island
• South Carolina
• Virginia

If you received a stimulus payment in 2022 from one of these states, check carefully to see if you need to report that income on your tax return. If you’re not sure, or you’re not comfortable filing your own taxes with the stimulus payment, you can work with a professional in exchange for tax preparation fees. Be sure, of course, that you do your research before selecting a provider to avoid a tax scam.

Many of the 2023 stimulus payments will be tied to the most recent tax returns this tax season. If you hope to continue receiving any future stimulus payments from your state or the federal government, you will need to file your IRS taxes each year. The government typically uses the state of your IRS taxes as the basis for additional payouts when stimulus payments occur. Even if you’re not receiving a stimulus this year, you can still apply for a tax credit if you qualify based on income or dependents, which will work essentially like an extra payment. 

Conclusion

You want to be ready this tax season to file your return carefully – and safely – to maximize your return and avoid any issues. To keep your financial information and money safe and avoid any tax scams, be sure you collect all of your documents and review them carefully, file your tax return with a reputable program after reading reviews, and avoid speaking on the phone about tax matters. Remember – the IRS will never call you.

Something goes wrong in your 2023 tax season? Report your concerns and warn others by leaving a review on PissedConsumer.com to warn others and hopefully find a resolution.