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Tax ProsInflation Reduction Act Strategic Operating Plan – The IRS unveiled its Strategic Operating Plan, an ambitious effort to transform the tax agency and dramatically improve service to taxpayers and the nation during the next decade. The report outlines the agency’s historic plans to make fundamental changes following funding from last year’s Inflation Reduction Act.
2023 tax inflation adjustments – The IRS announced the tax year 2023 annual inflation adjustments for more than 60 tax provisions, including the tax rate schedules and other tax changes. Revenue Procedure 2022-38 provides details about these annual adjustments.
2023 standard mileage rates – Beginning January 1, 2023, the standard mileage rates used to calculate the deductible costs of operating a car (also vans, pickups or panel trucks) are 65.5 cents per mile for business use. For details, see IRS issues standard mileage rates for 2023; business use increases 3 cents per mile.
Filing Your Taxes this Year
Missed the filing deadline – The IRS urges taxpayers who missed the April 18 filing deadline to file as soon as possible. Taxpayers who owe and missed the deadline without requesting an extension should file quickly to limit penalties and interest. For struggling taxpayers unable to pay their tax bill, the IRS has several options available to help.
Disaster Tax Relief – Disaster-area taxpayers in most of California and parts of Alabama and Georgia now have until Oct. 16, 2023, to file various federal individual and business tax returns and make tax payments. Previously, the deadline had been postponed to May 15 for these areas.
Arkansas, Indiana, Mississippi, and Tennessee storm victims now have until July 31, 2023, to file various federal individual and business tax returns and make tax payments. The tax relief postpones various tax filing and payment deadlines that occurred starting on March 24 (Mississippi) and March 31 (Arkansas, Indiana, and Tennessee), 2023.
New York storm victims now have until May 15, 2023, to file various federal individual and business tax returns and make tax payments. The tax relief postpones various tax filing and payment deadlines that occurred starting on December 23, 2022.
The current list of eligible localities and other details for each disaster are always available on the Tax Relief in Disaster Situations page.
State payments – The IRS provided details clarifying the federal tax status involving special payments made by 21 states in 2022. During a review, the IRS has determined that taxpayers in many states will not need to report these payments on their 2022 tax returns.
Families who don’t owe taxes can still claim key tax credits – Families and individuals who qualify can still file their 2021 tax return and claim without penalty some or all of the 2021 Recovery Rebate Credit, the Child Tax Credit, the Earned Income Tax Credit and other tax credits. The IRS sent a letter to 9 million individuals and families who appear to qualify for a variety of key 2021 tax benefits but did not yet claim them.
Puerto Rico families can claim the Child Tax Credit – Families with children in Puerto Rico who don’t owe taxes to the IRS can still file their 2021 tax return at any point until April 15, 2025, and claim without penalty the Child Tax Credit of $3,600 per child.
Tax credits for families revert to 2019 levels – You’ll likely receive a significantly smaller refund compared to last year because the Child Tax Credit (CTC), the Earned Income Tax Credit (EITC) and the Child and Dependent Care Credit amounts revert to pre-COVID levels:
- The CTC is worth $2,000 for each qualifying child for 2022. A child must be under age 17 at the end of 2022 to be a qualifying child.
- For the EITC, eligible taxpayers with no children who received roughly $1,500 in 2021 will now get $560 for the 2022 tax year.
- The Child and Dependent Care Credit returns to a maximum of $2,100 in 2022 instead of $8,000 in 2021.
Premium Tax Credit expanded –You may be eligible for tax year 2022 under the temporarily expanded eligibility for the Premium Tax Credit. You must meet both the income requirements and the other eligibility criteria.
Form 1099-K reporting threshold still $20,000 – For 2022, third-party settlement organizations who issue Forms 1099-K are only required to report transactions for gross payments over $20,000 (not $600) and more than 200 transactions. For more information, see the IRS news release and updated frequently asked questions in Fact Sheet 2023-06PDF.
Stimulus payments – There were no new stimulus payments for 2022, unlike 2020 and 2021.
No above-the-line charitable deductions – During COVID, taxpayers were able to take up to a $600 charitable donation tax deduction on their tax returns. However, for tax year 2022, taxpayers who don’t itemize and who take the standard deduction, won’t be able to deduct their charitable contributions.
Paycheck Protection Program (PPP) loans improperly forgiven are taxable – If you inappropriately received forgiveness of your PPP loan, we encourage you to file an amended return that includes forgiven loan proceed amounts in income. IRS issued guidancePDF that confirms if your PPP loan is forgiven based on misrepresentations or omissions, you can’t exclude the forgiveness from your income. You must include in your income the portion of the loan proceeds that were forgiven based upon misrepresentations or omissions.
Clean Vehicle and Energy Credits
New, Previously-Owned and Qualified Commercial Clean Vehicles Credit – The Inflation Reduction Act of 2022 (IRA) made several changes to the new clean vehicle credit for qualified plug-in electric drive motor vehicles, including adding fuel cell vehicles. The IRA also added a new credit for previously owned and commercial clean vehicles. Get answers to frequently asked questions about the new, previously owned and qualified commercial clean vehicles credit.
Home energy credits – The Inflation Reduction Act of 2022 (IRA) amended credits for energy efficient home improvements and residential energy property. Get details on eligible expenditures and how the credit limitations work in the frequently asked questions about energy efficient home improvements and residential clean energy property credits.
Alternative fuel credits – Find rules to make a one-time claim for the credit and payment allowable for alternative fuels sold or used during 2022 first, second, and third calendar quarters in Notice 2022-39. Also get instructions for how a taxpayer’s liability for excise tax may be reduced by claiming the alternative fuel mixture credit allowable for 2022 first and second quarters. The alternative fuel credits are part of the Inflation Reduction Act.
See Credits and deductions under the Inflation Reduction Act.
IRS Operations
Status of IRS tax return inventory from prior years – Visit our IRS Operations: Status of Mission-Critical Functions page to find the current status of IRS’s processing of some prior year tax returns and amended returns.
IRS suspends dozens automated notices, including collection issues – As we announced on Feb. 14, 2022, as part of ongoing efforts to provide additional help for people during this period, the IRS suspended automated collection notices normally issued when a taxpayer owes additional tax or has no record of filing a tax return. Note that many other IRS notices are required by law to be issued within a certain timeframe to be legally valid. The IRS encourages those who have a filing requirement and have yet to file a prior year tax return or to pay any tax due to promptly do so as interest and penalties will continue to accrue. Visit Make a Payment for payment options. For more information on suspended notices, see IR-2022-31, IRS continues work to help taxpayers; suspends mailing of additional letters.