2023 Tax Return Filings: Time to Start Planning

December 6, 2023

2023 is ending – and you will soon need to prepare to file your 2023 tax returns. Early December is a great time to start thinking about what you will need to begin filing those 2023 tax returns.

Here are some suggestions on what to consider now to make the process smoother when it is time to file tax returns:

1. Update your personal information:

  • If you have legally changed your name in the current year after getting married or divorced, or if you have moved, make sure all sources of your income have your new legal name/address. Income source examples: your employer, Social Security, and banks.
  • The IRS will reject any return with names that do not match the social security number with your updated name change.

2.    Organize and gather your tax documents:

  • Most of the information for your tax records will not be available until late January. Creating a list of the forms and other information you may receive can help you keep track when it comes to file.
  • Some of the common tax documents you might receive in 2023 are:
    • Forms W-2 (reporting wages)
    • Forms 1098 (reporting mortgage interest paid) 
    • Forms 1099-DIV, 1099-INT, or 1099-B (reporting dividends, interest & stock trading transactions)
    • Forms 1099-R (reporting pensions, annuities, or any retirement plan income)
    • Form 1099-G (reporting unemployment compensation, or any state and local tax refunds)
    • Form 1099-MISC, 1099-NEC or 1099-K (reporting income from businesses)
    • Form 1095-A (Health Insurance Marketplace Statement)
  • If you expect to be able to claim itemized deductions for 2023 (when total amounts exceed standard deduction amounts of $27,700 for married filing jointly, $13,850 for single filers and married filing separately, and $20,800 for head of household) follow these guidelines for keeping good records:
    • Charitable contributions - receipts and records should be maintained to support the deduction
    • Medical expenses – keep records of the amounts paid, dates paid and nature of the expense if you are anticipating taking itemized deduction
    • Home mortgage interest – you should receive Form 1098 in early February
    • State and local taxes – includes income taxes and property taxes. Income taxes withheld will be reported on Forms W-2. Keep records of estimated tax payments (see 9 above) and amounts and dates of property tax payments. NOTE: Under current tax law, the combined deduction for state and local taxes is limited to $10,000 ($5,000 if Married Filing Separately.)
  • A checklist, such as our Tax Organizer that you should receive in late December, will make it easier to keep up to date on the information needed to file their 2023 return. Reviewing your filed return from the previous year can also help to make your checklist so nothing is forgotten.

3. If you dealt with cryptocurrency in 2023:

  • Be mindful of the question you need to answer on your 2023 tax return: “At any time during 2023, did you: (a) receive (as a reward, award or payment for property or services); or (b) sell, exchange, gift or otherwise dispose of a digital asset (or a financial interest in a digital asset)?
  • You may receive reporting statements such as 1099-B to report your gains and losses. 

4. If you made retirement plan contributions this year:

  • You should receive documentation from the retirement plan administrator with the amounts contributed
  • Depending upon your situation some contributions may be deductible
  • Certain taxpayers may receive a credit for contributions to retirement plans

5. If you made gifts to during this year:

  • For gifts made in 2023, including cash, greater than $17,000 per recipient provide: 
    • Recipient name
    • Recipient address
    • Recipient relationship to donor (if any)
    • Description
    • If publicly traded securities, CUSIP number
    • If closely held entity stock, EIN

6. Estimated Tax Payments:

  • If you made any estimated tax payments for 2023, summarize the amounts for Federal, State, and Local payments.
  • Check if you need to make a 4th Quarter estimated payment. The due date is January 16, 2024.
  • By making estimated tax payments, it could reduce the late payment penalty.
  • To access records for payments made throughout the year, the IRS suggests creating an account at www.IRS.gov.

7. Tax credit changes for 2023:

  • For 2023, the Child Tax Credit (CTC) maximum credit amount for each qualifying child is $2,000. To be considered a qualifying child, the child must be under the age of 17 at the end of 2023.
    • The credit is non-refundable and is phased out if modified adjusted gross income exceeds $400,000 for married filing jointly and $200,000 for other filers.
  • Taxpayers may receive up to $600 with the Earned Income Tax Credit (EITC) in 2023 with no qualifying children.
  • Home energy tax credits may be beneficial to taxpayers that make energy improvements to their home. These credits are summarized in our prior blog article Home Energy Credits for Individual.

8. Be mindful of age based Required Minimum Distribution (RMD) rules for distributions from retirement plans:

  • If you reach age 72 in 2023, the required beginning date for your first RMD is April 1, 2025, for 2024.
  • If you reach age 73 in 2023, you were 72 in 2022 and subject to the age 72 RMD rule in effect for 2022. If you reach age 72 in 2022,
    • Your first RMD is due by April 1, 2023, based on your account balance on December 31, 2021, and
    • Your second RMD is due by December 31, 2023, based on your account balance on December 31, 2022.
  • Also, IRA owners over 70½ have the option to transfer up to $100,000 ($200,000 for a married couple, $100,000 each if both are over 70½) to charity tax free (Qualified Charitable Distributions) and it counts towards their annual RMD.

Final thoughts

We hope these suggestions will help you prepare and gather the necessary information to complete your 2023 tax return. Please contact your Herbein tax return preparer if you have any questions regarding the suggestions mentioned in this article or any other tax return preparation questions.


Article contributed by Katie Ziegler