Hello friends!
Today I wanted to make a brief post discussing the majority of the 2023 tax changes for those of you who are curious. In 2023, the changes focus heavily on reducing tax credits back down to pre-pandemic and 2021 norms. In short, these are:
1. The Child Tax Credit is returning to its old form. Instead of getting $3600 per dependent eligible in 2023, the credit has been lowered back down to its normal amount of $2,000 per child.
2. Earned Income Tax Credit for filers without children will return to its old value of $500, down from roughly $1500.
3. The Child and Dependent Care Credit (Daycare credit, basically) will be reduced from an $8,000 cap to $2,100. -------------- Some filers in the past, especially independent contractors, were told they would receive a form 1099k for income earned over $600, down from a threshold of $20,000. This change never actually took effect, so if you were worried about waiting for a 1099k (A form that details income that passes through credit card transactions), you won't need to wait anymore. Note: The taxability of the income is the same whether you receive a 1099k or not, the only change is the value of income in which this optional form becomes mandatory for the person who paid you. ------------ There is no longer an above the line deduction for charitable giving. Last year, the American Rescue Act allowed people to claim up to $600 in deductions for charitable giving whether they itemized or not. That is no longer the case, only filers who itemize will be able to realize a deduction from charitable giving.
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