As 2023 has been well underway, many Americans will benefit from reports of lower income taxes thanks to inflation changes made by the IRS. This includes retirees as well as those with high net worth who may now be able to make more advantageous tax free gifts.
The gift tax exemption is increasing significantly in 2023 — a whopping $12.92 million lifetime limit will be available to individuals and double that for married couples. That’s an additional $860k each individual can give away on top of their current allowance – fantastic news for those who love giving.
For those with average incomes, every year, the IRS helps prevent hard-working taxpayers from being pushed into a higher tax bracket due to inflation. This is known as “bracket creep”, and can be avoided by adjusting the existing income tax brackets in order to maintain buying power for people who remain at their same level of earnings. If your taxable income is $90,000 or less, you can benefit from reduced tax rates. Instead of paying 24%, your rate has now been lowered to 22%.
This year, married couples filing jointly will each receive a generous boost of 7% in their standard deduction when they prepare their taxes for 2023. They’ll benefit from an increased standard deduction of $27,700 – up substantially from the prior year’s rate of $25,900. Single filers won’t be left out as this tax season brings them a bump to claim even more – at least $13,850 compared with last years’ allowance of just under $12,950.
Retirement planning became simpler, with higher contribution limits and an extra $2,000 per taxpayer on 401(k)s. Flexible spending accounts are more accessible too – up by $200 from last year. And finally, mileage rates have risen 3 cents for greater ease in filing expenses associated with business trips and commutes.
According to the official IRS website, the Internal Revenue Service warns individuals to stay clear of shady tax preparers – and they offer tips on carefully choosing tax professionals.
The Internal Revenue Service today continued the Dirty Dozen series by cautioning taxpayers to avoid unscrupulous tax return preparers and provided important tips to find the right tax professional.
When it comes to taxes, you should be sure your financial wellbeing is in good hands. Beware of suspicious tax preparers who require a fee contingent on the size of your refund or attempt to make themselves untraceable by not signing off on returns and leaving blank spaces for you to fill in. In search of trusted professionals, many taxpayers can rely upon IRS-certified resources which have been established after vetting for taxpayer security.
Most tax professionals offer excellent advice and can really help people navigate complex tax issues. But we continue to see instances where taxpayers are “ghosted” by unscrupulous tax preparers with bad advice who quickly disappear,” said IRS Commissioner Danny Werfel. “We encourage taxpayers to check out the tools and resources available to them to ensure they find the right tax professional for their needs.
The IRS’ annual Dirty Dozen campaign is a powerful initiative warning taxpayers and tax professionals about the scams and schemes that put their money, data, and personal information at risk. From emerging threats to re-occurring ones, the Security Summit which is comprised of the IRS, the nation’s tax industry, state tax agencies, and tax professionals – has taken numerous steps since 2015 to caution people about common scams and schemes during tax season. The Security Summit initiative is also dedicated to protecting taxpayers and business owners from identity thieves and other scammers.
It is important to verify credentials of tax return preparers.
Choosing a tax preparer is an important decision – akin to selecting a doctor or lawyer. They are entrusted with your personal and financial details, making picking the right one vital for filing accurate documents without jeopardizing sensitive data. You would be wise to research credentials, qualifications, and their specific services when evaluating tax preparation candidates.
With taxes being a complicated and important task, it’s key for taxpayers to ensure they prepare them with the appropriate help. Note that all paid tax professionals must have an IRS Preparer Tax Identification Number (PTIN) to prepare federal tax returns. Depending on your individual situation, you may decide that using a tax professional is in your best interest. Regardless of who prepares the return, all reported information must be accurate.
The IRS offers resources for taxpayers to educate themselves on types of preparers and on their legal representation rights. The searchable and sortable Directory of Federal Tax Return Preparers with Credentials and Select Qualifications helps taxpayers find a preparer that can suit their needs and circumstances.
Unfortunately, not all tax preparers adhere to the highest professional standards. To ensure that your return is handled properly and with integrity, it’s important to steer clear of those “ghost” preparers who refuse to sign their preparation or fail to include a valid IRS Preparer Tax Identification Number (PTIN). By taking these simple precautions before hiring a tax expert, you can go forth into filing season feeling secure in knowing that your taxes are prepared by someone trustworthy.
Signing a tax return without reviewing it can leave taxpayers vulnerable and exposed to misinformation. To protect yourself, ensure that every part of the return is completely filled out before signing – especially if the preparer has promised an unrealistic refund or charges fees based on it. Do not sign a blank or incomplete return that was prepared by a paid preparer.
An unscrupulous tax preparer may request payment in cash and will avoid providing you with a receipt. They may attempt to claim falsified deductions or alter the reported income. In some egregious cases, such a preparer may attempt to have any refunded amounts directly deposited into their own account, so it is very important to review your tax return carefully before it is filed.
Taxpayers can help to protect other taxpayers by reporting any suspected scams or fraud to the Internal Revenue Service. Legitimate tax practitioners and individual taxpayers may also contact the IRS Whistleblower Office, and depending on the case, there may be cause for monetary reward to be paid to the whistleblower.
At The Floyd Law Firm PC, our firm is committed to helping individuals, families, and business owners. If you feel that you have been the victim of fraud, we may be able to help. We work as a team when solving problems in personal and business situations, and we understand how to protect our client’s interests. Our firm was one of the first in Surfside Beach, and we have been helping people there for over 50 years. Our focus is on fostering long solid relationships with all of our clients.
