Get ahead of the game with these expert tips

You don’t have to wait for the IRS to open tax season. You can start filing now, and there’s no downside to it.
One tax preparer is even incentivizing people to do so with a chance to win money.
Tax preparers also offer tips to look out for this year.

It’s never too early submit your tax returns, and just to reiterate that point, one tax preparer is offering an incentive to do just that.

On Monday, tax preparer Jackson Hewitt kicked off a weekly ‘Double Your Refund’ sweepstakes through April 2.

In celebration of its 40th anniversary, Jackson Hewitt is awarding 40 grand prize winners a “double tax refund” cash prize equivalent to the value of the winner’s federal tax refund, with a maximum match of $15,000, and a minimum prize of at least $1,500. Additionally, each week, 40 runner-up entrants will be randomly selected to win $400.

You can gain a sweepstakes entry by filing your taxes with Jackson Hewitt or if you don’t file your taxes with them, you can still mail in an entry by the Monday following the week that your federal tax return was filed within the sweepstakes period.

And yes, those winnings will have to be reported and taxed but not until next year’s tax season, says Mark Steber, Jackson Hewitt’s chief tax officer.

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Meantime, Americans should work on filing this year’s taxes as soon as possible to secure their refund. The IRS said on Thursday it’ll start processing tax returns on Jan. 23, but you can submit them now to assure yours is already in the queue to be one of the first ones the IRS processes and to secure a Jackson Hewitt sweepstakes entry.

“Tax refunds, for most Americans, are the single largest pay day of the year,” Steber says. “Most will receive over $3,000.”

What is the earliest I can file my taxes 2023 and why should I file early?

Today is as good of a time as any to prepare and submit your tax return to the IRS. Just know, it won’t be processed until the IRS officially opens tax season on Jan. 23.

If you file your tax return now to get queued up for when the IRS starts processing tax returns, yours will be among the first to get processed, which also means if there aren’t any problems, you’ll be among the first to get your refund check.

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There are other reasons to file early too. They include:

Locking down your information. Once you file and the IRS has your return, no one can steal your information and try to file a return on your behalf and steal your refund.
More time to file an accurate return. If you or your tax preparer find a mistake, you have more time to correct it. Filing an accurate return will ensure you’ll get your refund quickly if you’re due one.
Time to prepare finances in case you owe money. If you owe money, it’s better to find out sooner than later so you can come up with the money. Even if you file your taxes early, you still have until April 18 to pay.

What should I expect this tax season?

Just like most things in our lives, tax laws have reverted to pre-pandemic times.

That means, for example, people can no longer take charitable tax deductions again unless they itemize their deductions, and the itemized items exceed the standard deduction. Last year, taxpayers could claim a deduction of up to $300 in donations or $600 for those filing jointly even if they took the standard deduction.

The child tax credit and the child and dependent care tax credits have both been reduced again to their pre-pandemic levels, $2,000 per child and up to $3,000 for one dependent or $6,000 for multiple dependents, respectively.

There also was no government stimulus in 2022, which the IRS warned earlier that combined with some of the other tax reversions could mean smaller refunds this year.

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What tax tips should I consider?

Even though home sales dropped off sharply toward the end of 2022, millions of homes were still bought and sold and will affect your taxes.

“If you bought a home, you had one of the premier life changes that will fundamentally change your taxes,” Steber said. If you bought a home, he said you’ll most likely have moved to itemized deductions if you weren’t already there.

Items you may be able to deduct include:

Prepaid mortgage interest (points),
Real estate taxes you paid
Qualifying home mortgage interest
mortgage insurance premiums

Don’t forget, too, if you also sold a home, you can deduct some of the expenses related to selling that home such as legal fees, escrow fees, advertising costs, and real estate agent commissions.

If you lived in the house you sold for at least two of the past five years, you can also exclude up to $250,000 of the capital gains from the sale if you’re single, and $500,000 if married.

In the past year, we’ve also seen a lot of job switching. If you’re a high earner, be aware that the amount of Social Security taxes you pay is capped. So, if you hit the cap and then changed jobs, “there’s no way your new employer would know that and will start withholding that again,” Steber said. That extra withholding should get returned to you as a credit on your federal income tax, he said.

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Special tax considerations for retirees and elderly taxpayers

“The first thing to know is as people move from working years into retirement, taxes change because income changes,” said Lynnette Lee-Villanueva, vice president for Tax Aide in the AARP Foundation, which provides free tax services nationwide to seniors between Feb. 1 and April 18.

Instead of a W-2 form from your employer, you’ll have to keep track of probably multiple 1099-Rs for distributions from pensions and other retirement funds and Social Security documents.

Also, when you turn 65 years old, the IRS offers you a larger standard deduction. For example, a single 65-year-old taxpayer receives a $14,700 standard deduction, compared with a $12,950 one for those who are younger.

That higher standard deduction means fewer people are itemizing, but Lee-Villanueva warns that “people with high health deductibles are still better off to itemize so they need to keep track of things like mileage to appointments back and forth and other medical expenses that can qualify.”

Consider your location, too, if you’re older.

“A lot of states have some form of property tax program that will help people remain in their house, either freeze or reduce property taxes for older Americans,” she said. “They should be aware of what is available to them and may be eligible for.”