Inflation, that’s a term that has been on everyone’s mind lately. Every time you gas up your car or buy some groceries you receive a fresh reminder that the almighty dollar isn’t going as far as it used to. As a tax professional you have more to consider when dealing with inflation other than just spending more on necessities. Inflation will often affect the tax code, minimums and maximums in order to qualify for specific credits. We here at Swift Financial Partners want to ensure that the tax preparers who trust us are ready for anything the upcoming tax season can throw at them.
For this week’s article we wanted to share some of the adjustments the IRS has made to the tax code in order to combat inflation creep for taxpayers.
Standard Deductions:
Married Filing Jointly: $27,700 (Increase of $1,800 from previous year).
Single/ Married Filing Separately: $13,850 (Increase of 900 from previous year).
Head of Household: $20,800 (Increase of $1,400 from previous year).
Marginal Rates:
37% for income over $578,125 ($693,750 for MFJ)
35% for income over $231,250 ($462,500 for MFJ)
32% for income over $182,100 ($364,200 for MFJ)
24% for income over $95,375 ($190,750 for MFJ)
22% for incomes over $44,725 ($89,450 for MFJ)
12% for incomes over $11,000 ($22,00 for MFJ)
10% for incomes less than $11,000 ($22,000 MFJ)
Earned Income Tax Credit:
The maximum Earned Income Tax Credit for the 2023 Tax Year has been raised from $6,935 to $7,430 for qualifying taxpayers.
Miscellaneous:
Annual exclusion for gifts is raised to $17,000.
Credits for qualifying adoption expenses are now $15,950.
Foreign income exclusions are up to $120,000.
Inflation isn’t fun for anyone so in order to prevent it from getting out of hand the IRS has adjusted the tax code to better reflect the current economic situation the majority of us find ourselves in. With these adjustments, and the skills of experienced tax preparers, we hope that the majority of taxpayers are able to enjoy larger returns or at least reduce the amount of taxes owed to the IRS.
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