We must finish submitting taxes. Starting in late January, the IRS accepts and processes tax returns until April 15, allowing for weekends and holidays. Tax professionals recommend early planning to speed up refunds.
Inflation Adjustments, Tax Brackets, and the Benefits of Early Filing for Your 2023 Tax Season
Last year’s average tax refund was $2,753, down from $3,012, but inflation adjustments might enhance refunds, according to Jackson Hewitt Chief Tax Officer Mark Steber. Based on inflation, the IRS adjusts tax brackets and deductions annually. Due to inflation, 2023 tax brackets rose a record 7%, potentially placing individuals in lower tax categories with lower tax rates.
If your taxable income remains stable, the modified brackets may lower your tax bracket. The 7% rise in standard deductions benefited approximately 90% of American taxpayers. Higher 401(k) and IRA contribution limits can shelter more income from taxes in addition to inflation adjustments. When withdrawn, pretax contributions are taxed, whereas Roth accounts, funded with after-tax money, are not.
Beginning in 2024, the IRS will raise income thresholds for each tax rate. For several reasons, early tax filing is the present focus. Tax refunds are a big incentive, with three out of four taxpayers expecting one. Most Americans consider it the “single largest payday of the year.” remarks Mark Steber. Filing early protects your information from theft, allows time for accurate return revision, and alerts you if you owe money.
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Preparing Your Taxes Early for Faster Refunds and Financial Security
After receiving their 2023 tax information, people can prepare the relevant documents but not submit their returns until the IRS opens. People can queue up their forms with tax preparers for automatic filing when the IRS opens tax season once everything is in order. Active filing puts you among the early filers and boosts your chances of getting a refund quickly.
The 2023 tax season may benefit from inflation adjustments and higher contribution limits. Filing early protects against identity theft, speeds up refunds, and allows for correct return preparation. For a better financial start in 2024, prioritize tax preparation as the new year approaches.