Whereas the 2022 submitting season might have been a bumpy experience, it was really remarkably clean, in line with Mark Steber, senior vice chairman and chief tax officer at Jackson Hewitt — however tax professionals shouldn’t essentially count on the identical going ahead.
“It was clean by any customary, however particularly so if you evaluate it with the 2 seasons earlier than it,” he stated. “Returns have been processed seamlessly, and our prospects received their refunds seamlessly. Having stated that, there are at all times issues and glitches, however in reflection not as many because the previous two years. I might give the IRS a strong ‘A’ when it comes to effectivity.”
However that doesn’t imply that subsequent yr shall be simply as clean, Steber predicted. “Because the pandemic has been waning, a lot of the issues have handed, however that gained’t make it a neater tax season,” he stated. “There shall be loads of large tax adjustments for the 2023 season, even within the face of no new laws.”
“Many advantages that have been in place for the 2021 tax yr final submitting season have expired or modified considerably,” he noticed. For instance, the Youngster Tax Credit score, the Youngster and Dependent Care Tax Credit score, and the Earned Earnings Credit score shall be much less useful than in prior years. “This may create confusion and decrease refunds. The charitable donation deduction for nonitemizers was right here for 2021 however shall be gone for the 2022 tax yr. It wasn’t an enormous perk, however it helped loads of taxpayers who donated to charities however didn’t itemize.”
Refunds have been up 8% for the 2021 tax yr, he stated: “However the numbers don’t inform the entire story of taxpayers with massive households that have been helped by these advantages. Tax yr 2022 will produce many refund surprises, as a result of the advantages that have been out there final yr gained’t be there. So we’re teaching our purchasers to do a midyear examine as much as anticipate expiring advantages.”
One other essential problem to observe for is the brand new thresholds that apply to Kind 1099-Ok, he indicated. Kind 1099-Ok, “Fee Card and Third-Occasion Community Transactions,” is an info return used to report fee transactions. For returns previous to the 2022 calendar yr, the shape required the reporting of gross funds that exceeded $20,000 for greater than 200 transactions. For returns for calendar years 2022 and after, the edge has been lowered to reporting any single transaction of $600 or extra.
“That is essential for the self-employed or side-giggers,” Steber stated. “Lots of people received inventive and began a aspect hustle throughout 2019 and 2020. Rather a lot are doing it immediately in response to the excessive inflation simply to make ends meet. However with the decrease reporting thresholds, we anticipate loads of confusion over the reporting necessities. Many individuals shall be seeing Kind 1099-Ok for the primary time.”
Steber predicts there shall be strong capital positive factors this yr. “Individuals are nonetheless shopping for and promoting,” he stated. “They may have losses that may offset positive factors or make them partially deductible.”
And he expects some adjustments ensuing from the midterm elections in November. “Every time there’s an enormous midterm election, there shall be some new proposed laws,” he stated. “There’s been some speak of a brand new little one and household advantages bundle. Furthermore, some states are speaking about getting aggressive with their very own plans to assist individuals, for instance, by way of state gasoline playing cards. Relying on the state of the financial system and the temper of the voters, I can undoubtedly see a post-November bipartisan advantages bundle.”