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Taxpayers have several free filing options this season, including the IRS Direct File Pilot Program, which opened fully to taxpayers in 12 states on Tuesday, the IRS This includes testing direct files.
You can also choose IRS Free File, a partnership between the IRS and a nonprofit coalition of eight software partners. In 2023, Free File can be used under the following conditions: Adjusted gross income Under $79,000, up from $73,000 in 2022.
Other free filing options include volunteer income tax assistance, tax counseling for seniors, MilTax, and software from private companies.
According to IRS Commissioner Danny Wuerffel, nearly 1 in 5 eligible taxpayers miss out on the Earned Income Tax Credit (EITC). The EITC is a tax cut for low- to moderate-income earners, and the average amount last season was $2,541.
“This is a lot of money,” he told reporters at a news conference in January, adding that millions of Americans “are simply falling through the cracks.”
For the 2023 tax year, the EITC is worth up to $7,430 per family with three or more children, up from $6,935 in 2022. Eligible workers between the ages of 25 and 64 who do not have eligible children can receive up to $600.
Some filers may also qualify for tax credits in 2023 for car purchases and home energy improvements. According to the I.R.S..
John Lloyd, a certified financial planner and registered agent and owner of The Wealth Planner in Fort Worth, Texas, said that after Dec. 31, you can reduce your tax bill for the tax year or increase your refund. “You’ll have a much smaller toolbox of options,” he said. But there are still strategies you can employ.
One of your first options is usually to make pre-tax contributions to an individual retirement account, which may be deductible depending on your workplace plan participation and income. Similarly, you can receive a tax break by contributing to a spousal IRA.
The limit is $6,500 per account (plus $1,000 if you’re 50 or older) and is due until the 2023 tax deadline for contributions.You can qualify for benefits depending on your income. saver credit Retirement contributions can be matched up to 10%, 20% or 50% of your deposit.
And if you have a high-deductible health insurance plan, you still have time to make contributions to your health savings account in 2023. HSAs offer three tax breaks: upfront deductions for qualified medical expenses, tax-free accretions, and tax-free withdrawals.
—CNBC’s Sharon Epperson contributed reporting.
