2023
Year End
Year End
2018 Tax Cuts and Job Acts (TCJA)
This is the new tax law that was signed into law in December 2017.
The changes are to deductions, tax rates, exemptions and tax credits.
These changes remain in effect for 2023.
Deductions
There are 2 main deductions, the standard deduction and the itemized deductions.
You are allowed to claim one of these deductions on your return, not both. These
deductions are used to reduce the taxable income on your tax return.
- Standard Deduction
Single $13,850.00
Married Filing Jointly or Qualifying
Window(er) $27,700.00
- Married Filing Separately $13,850.00
- Head of Household $20,800.00
There is an additional standard deduction amount for elderly (65 years old and older) and blind taxpayers, which
is $1,500.00 each for tax year 2023 (So married couples in which both spouses are over 65 and blind would see their standard deduction increase by $6,000 - or $1,500 times four). This amount increases to $1,850.00 if the taxpayer is also unmarried at age 65.
Personal Exemption
There are no longer any personal exemptions
Tax Credits
-Child Tax Credit
The child tax credit is $2,000.00 per eligible dependent. The age limit is age 17. The refundable portion of the $2,000.00 tax credit is $1,800.00.
Any qualifying dependent over 17 years of age qualifies for a $500.00 credit. No portion of the $500.00 credit is refundable. Those with higher incomes - $200,000 for single and $400,000 for joint filers will still be eligible for the $2,000 credit based on income level.
There was no prepayment of the Child Tax Credit in 2023.
-Child and dependent care credit. Generally, it’s 20% or 35% of the amount paid up to $3,000 of daycare and similar costs for a child under 13, and up to $6,000 for two or more dependent children.
Affordable Care Act
There is no longer a "shared responsibility payment" required for the months in 2023 that you do not have health insurance.
Everyone in 2023 will still be affected by this health care act.
If you were covered through the Healthcare Market Place, you must provide us with the paperwork the Market Place will provide to you in January to calculate the insurance premium credit.
IRA
The contribution limit for Roth and traditional IRAs is $6,500, with a catch-up contribution of $1,000 for those 50 and older. Remember, if your employer sponsors a retirement plan, then the deductions you can claim for contributions to a traditional IRA begin to phase out at a certain income level. Contributions to a Roth IRA also phase out at certain income.
To claim the contribution on your 2023 tax return, the contribution must be made on or before the due date of the return which is April 15, 2024.
This is the new tax law that was signed into law in December 2017.
The changes are to deductions, tax rates, exemptions and tax credits.
These changes remain in effect for 2023.
Deductions
There are 2 main deductions, the standard deduction and the itemized deductions.
You are allowed to claim one of these deductions on your return, not both. These
deductions are used to reduce the taxable income on your tax return.
- Standard Deduction
Single $13,850.00
Married Filing Jointly or Qualifying
Window(er) $27,700.00
- Married Filing Separately $13,850.00
- Head of Household $20,800.00
There is an additional standard deduction amount for elderly (65 years old and older) and blind taxpayers, which
is $1,500.00 each for tax year 2023 (So married couples in which both spouses are over 65 and blind would see their standard deduction increase by $6,000 - or $1,500 times four). This amount increases to $1,850.00 if the taxpayer is also unmarried at age 65.
Personal Exemption
There are no longer any personal exemptions
Tax Credits
-Child Tax Credit
The child tax credit is $2,000.00 per eligible dependent. The age limit is age 17. The refundable portion of the $2,000.00 tax credit is $1,800.00.
Any qualifying dependent over 17 years of age qualifies for a $500.00 credit. No portion of the $500.00 credit is refundable. Those with higher incomes - $200,000 for single and $400,000 for joint filers will still be eligible for the $2,000 credit based on income level.
There was no prepayment of the Child Tax Credit in 2023.
-Child and dependent care credit. Generally, it’s 20% or 35% of the amount paid up to $3,000 of daycare and similar costs for a child under 13, and up to $6,000 for two or more dependent children.
- Payments made out of a dependent-care flexible spending account or other tax-advantaged program at work may reduce your credit.
- The credit for 2023 is now refundable.
- If your AGI is less than $63,399, it’s something to look into, though if you had more than $11,000 of investment income, dividends, capital gains and a few other things in 2023, you won’t qualify.
- Note: You can get up to $600 in 2023 from the earned income credit even if you don’t have kids, though only if your income is less than $17,640 as a single filer or $24,210 if you’re filing jointly.
- The credit begins to phase out at $239,230 of modified adjusted gross income, and people with AGIs higher than $279,230 don’t qualify.
- Also, you can’t take the credit if you’re adopting your spouse’s child.
- People who adopt special-needs children can get up to the full credit even if their actual expenses were less.
- In some cases, the adoption need not be final before you claim the credit; in others, it must be.
Affordable Care Act
There is no longer a "shared responsibility payment" required for the months in 2023 that you do not have health insurance.
Everyone in 2023 will still be affected by this health care act.
If you were covered through the Healthcare Market Place, you must provide us with the paperwork the Market Place will provide to you in January to calculate the insurance premium credit.
IRA
The contribution limit for Roth and traditional IRAs is $6,500, with a catch-up contribution of $1,000 for those 50 and older. Remember, if your employer sponsors a retirement plan, then the deductions you can claim for contributions to a traditional IRA begin to phase out at a certain income level. Contributions to a Roth IRA also phase out at certain income.
To claim the contribution on your 2023 tax return, the contribution must be made on or before the due date of the return which is April 15, 2024.
