It’s never too early to file your taxes, and to emphasise that point, one tax preparer is offering an incentive to do so.
Jackson Hewitt, a tax preparer, launched a weekly ‘Double Your Refund’ sweepstakes on Monday that will run through April 2.
Jackson Hewitt is celebrating its 40th anniversary by awarding 40 grand prize winners a “double tax refund” cash prize equal to the value of the winner’s federal tax refund, with a maximum match of $15,000 and a minimum prize of $1,500. In addition, 40 runner-up entrants will be chosen at random each week to win $400.
You can enter the sweepstakes by filing your taxes with Jackson Hewitt, or you can mail in an entry by the Monday following the week that your federal tax return was filed during the sweepstakes period.
And, yes, those winnings must be reported and taxed, but not until the following tax season, according to Mark Steber, Jackson Hewitt’s chief tax officer.
Meanwhile, Americans should file their taxes for this year as soon as possible to ensure a refund. Even though the IRS hasn’t set a date for when it will begin processing returns, you can submit them now to ensure yours is among the first to be processed and to secure a Jackson Hewitt sweepstakes entry.
“Tax refunds are the single largest pay day of the year for most Americans,” Steber says. “The majority will receive more than $3,000.”
What is the earliest I can file my taxes in 2023, and why should I?
Today is a good day to prepare and file your tax return with the IRS. Just keep in mind that it will not be processed until the IRS officially opens tax season, which is usually in late January.
If you file your tax return now, yours will be among the first to be processed when the IRS begins processing tax returns, which also means you’ll be among the first to receive your refund check if there aren’t any problems.
There are additional reasons to file early. They are as follows:
Keeping your data secure. Once you file your return and the IRS receives it, no one can use your information to file a return on your behalf and steal your refund.
More time to file a complete tax return. If you or your tax preparer discover an error, you will have more time to correct it. Filing an accurate return will ensure that you receive your refund as soon as possible if you are due one.
It is now time to prepare your finances in case you owe money. If you owe money, it’s best to find out as soon as possible so you can pay it back. Even if you file your taxes ahead of time, you have until April 18 to pay.
What can I expect during tax season?
Tax laws, like most other aspects of our lives, have reverted to pre-pandemic levels.
That means, for example, that people cannot take charitable tax deductions unless they itemise their deductions and the itemised deductions exceed the standard deduction. Even if they took the standard deduction, taxpayers could deduct up to $300 in charitable contributions last year, or $600 if filing jointly.
Both the child tax credit and the child and dependent care tax credits have been reinstated to their pre-pandemic levels of $2,000 per child and up to $3,000 for one dependent or $6,000 for multiple dependents.
There was also no government stimulus in 2022, which the IRS warned earlier could mean smaller refunds this year when combined with some of the other tax reversions.
What tax advice should I think about?
Even though home sales slowed dramatically toward the end of 2022, millions of homes were still purchased and sold, affecting your taxes.
“If you bought a home, you experienced one of the most significant life changes that will fundamentally change your taxes,” Steber explained. If you bought a home, he predicted you’d have switched to itemised deductions if you weren’t already.
You may be able to deduct the following items:
Prepaid mortgage interest (points), paid real estate taxes
Mortgage insurance premiums on qualifying home mortgages
Don’t forget that if you also sold a home, you can deduct some of the costs associated with the sale, 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 previous five years, you can deduct up to $250,000 in capital gains if you’re single, and $500,000 if you’re married.
We’ve also seen a lot of job switching in the last year. If you earn a lot of money, you should know that the amount of Social Security taxes you pay is limited. So, if you reached the cap and then changed jobs, “there’s no way your new employer would know and start withholding that again,” Steber explained. According to him, the extra withholding should be returned to you as a credit on your federal income tax.
Special tax considerations for retirees and the elderly
“The first thing to understand is that as people transition from working to retirement, their taxes change because their income changes,” said Lynnette Lee-Villanueva, vice president for Tax Aide at the AARP Foundation, which provides free tax services to seniors nationwide between Feb. 1 and April 18.
Instead of a W-2 form from your employer, you’ll have to keep track of multiple 1099-Rs for pension and other retirement fund distributions, as well as Social Security documents.
In addition, when you reach the age of 65, the IRS provides you with a larger standard deduction. A single 65-year-old taxpayer, for example, receives a $14,700 standard deduction, compared to $12,950 for those younger.
Because of the higher standard deduction, fewer people itemise, but Lee-Villanueva cautions that “people with high health deductibles are still better off itemising, so they need to keep track of things like mileage to appointments back and forth and other medical expenses that can qualify.”
If you’re older, consider your location as well.
“A lot of states have some kind of property tax programme that will help people stay in their homes, either freezing or lowering property taxes for older Americans,” she explained. “They should be aware of what is available to them and to which they may be eligible.”