As a working adult, your money is likely increasingly important. It would help if you had cash for your many expenses and some savings. Moreover, you likely want it to work for you.
Understanding tax law is an integral part of this understanding. Personal taxes can often be confusing, even more so when the tax laws change regularly.
If you want to understand better how taxes work, keep reading for the top five personal tax questions to which you need to find answers.
1. Should My Income Tax Rate Change?
Should my income tax rate change? It largely depends on your taxable income amount and filing status. Those with higher incomes would usually experience an increase in their income tax rates, while those with lower incomes are likely to see their income taxes reduced.
You should consult a tax professional to get the most accurate information.
2. Are There Any New Credits or Deductions?
Among the top questions related to the personal tax filing for 2023 is whether taxpayers can take advantage of any new credits or deductions. The IRS has announced several unused credits and deductions available for 2023.
You can take various deductions, such as those related to foreign or custodial fees or transaction costs. Knowing the rules associated with investment deductions and taxes can help you make the most of income or gains generated from investments.
3. How Will Investments Be Impacted?
As we look to the future of personal taxes in 2023, one of the top questions revolves around how investments will be affected. The good news is that, for most taxpayers, there will be minimal changes to how assets are taxed.
An increase in the maximum capital gains rate from 20 to 21 percent is expected, but most average taxpayers will still benefit from this rate. Finally, visit this website to remain mindful of capital gains tax rates, as these can change depending on your tax bracket and investment portfolio.
4. How Will Alimony Be Treated?
The question of how alimony will be treated in 2023 is a question many taxpayers have. As of 2021, the answer is that maintenance is taxable to the receiving spouse, meaning the paying spouse will claim the payments as a deduction on their taxes.
They may pass a new tax law that changes alimony tax rules for the upcoming tax season. Taxpayers should also be aware of state laws that may affect their alimony payments and deductions, as these can vary from state to state.
5. Are Changes Needed for Filing Status or Withholdings?
Changes to filing status or withholding must be discussed with a qualified tax professional so that a taxpayer can make the best decision according to their circumstances. Using the correct filing status and withholdings can significantly reduce tax liability. Knowing the best route before filing taxes can save an individual from costly penalties and interest.
The Most Common Tax Questions
2023 is almost here, and understanding personal tax questions is key to ensuring you pay the appropriate taxes. With the answers to the top five questions for 2023 outlined above, you can now confidently prepare for filing taxes. The sooner you start researching and understanding your personal tax questions, the better prepared you will be.
Get started now to avoid any unpleasant surprises!
If you’d like more tips for handling your tax situation, visit our blog for more information.