How to Do Your Taxes in 2023: a DIY Tax Filing Guide

A Guide to Filing your Taxes in 2023

We’re smack dab in the middle of the 2023 tax filing season. If you visit the IRS website and have a look around, there really is no simple tax guide to get you started (there is a 139-page book, but who has time for that?), and DIY tax filing can seem overwhelming for individuals not versed in the U.S. tax code. If you’re a first-time tax DIYer, you’re often on your own as far as figuring out the basics of how to do taxes. So I wanted to lend a hand. This article will highlight a good chunk of the basics on how to do your taxes. Even for those who have DIY tax experience – you’ll find value here as well – with updates on what’s new for 2023 tax filing, deadlines, credits, deductions, tax tips from readers, tax software discounts, and much more.

Disclaimer: I’m not an accountant or tax pro, so don’t view me as such. I’m a personal finance writer who has been DIYing my own taxes for a while and will hopefully be able to provide you with some info and tips you weren’t aware of that you can explore further.

What’s New for the 2023 Tax Season (2022 Tax Year Filing)?

Here are some things to take note of prior to filing your 2022 tax return:

• The tax filing start date was January 23 this year.
• The 2023 IRS tax filing deadline is Tuesday, April 18 – with a few exceptions:
  • California, Georgia, and Alabama storm victims have until October 16, 2023, to file returns and pay any taxes that were originally due during this period.
• A number of temporary (and popular) COVID-era tax benefits that were included in the American Rescue Plan Act had expired for 2022.
  • The above-line universal charitable donation deduction is gone. Only those who itemize deductions can deduct donations for 2022.
  • The expanded Child Tax Credit reverts to previous levels, with a few modifications.
  • The Child & Dependent Care Credit also reverts to previous levels.
  • The expanded Earned Income Tax Credit benefits revert to prior levels.
  • FSA fund carryover expansion changes were in place for 2021 to 2022, but revert to prior levels for 2022 to 2023 carryovers.
• The tax brackets and standard deductions, maximum 401K contribution, maximum employer 401K contribution, maximum IRA contribution, and maximum HSA contribution were all adjusted for inflation.
• The energy tax credits were retroactively restored for 2022 and enhanced for 2023, along with the creation of 2 new energy rebates that start in 2023. Electric vehicle tax credits got a major update. More info on both below.
• Third-party settlement organizations – e.g. payment apps like Cash App, PayPal, Venmo, and EBay – were supposed to issue 1099Ks for transaction totals exceeding $600, down from the previous $20,000+ and 200+ total transactions, starting in 2022. The IRS later walked back this change for 2022.
• For tax year 2022, taxpayers may qualify for temporarily expanded eligibility for the Affordable Care Act’s premium tax credit. You must also meet the other eligibility criteria.

What Tax Forms do You Need to do your Taxes?

Before you get started, you’ll need to get tax forms from your employer(s), bank(s), brokerage(s), and more. Without proper forms, you can’t do your taxes. Common forms include:

• W-2: income, withholding, etc. from your employer
• 1095A: if you bought health insurance on a state or federal exchange.
• 1098: mortgage interest paid, over $600.
• 1098-T: higher education expenses paid.
• 1098-E: student loan interest paid.
• 1099-B: investment brokerage statement that covers gains/losses from trades.
• 1099-DIV: investment brokerage statement that covers any taxable capital gains or dividends paid out to you.
• 1099-INT: taxable interest exceeding $10, typically from a savings, checking, CD, or money market bank account.
• 1099-K: payment settlements from card or third party network transaction
• 1099-MISC: miscellaneous income exceeding $600 from any one source (e.g. freelance or consulting work).
• 1099-NEC: a newer form for freelance/gig-worker income. NEC = “non-employee” compensation.
• 1099-SA: if you took distributions from an HSA, this form documents how much.

If you have not yet received forms you are expecting in the mail, I would recommend logging in to the respective account online and trying to find the form there to download.

Do I Need to File a Tax Return?

You may be wondering “Do I need to file a tax return?“. See that article for full details, but there may be scenarios where you do not need to file a tax return, including if your income is below specified minimum income thresholds. However, even in these scenarios, it may still be advantageous to file a federal tax return, as you may be eligible for at least one of a number of refundable tax credits from the IRS or other benefits.

Get an Identity Protection PIN and/or File your Taxes Early to Help Prevent Tax Identity Theft

Tax identity theft fraud is a problem. This occurs when fraudulent tax returns for refunds are filed in your name. How can you help avoid this? You can get an IRS Identity Protection PIN to help prevent tax fraud. The PINs are available to all taxpayers for the first time. Think of it as a 2-factor authentication for tax filing.

If you don’t get a PIN, the longer you wait to file a return, the greater the chance someone could fraudulently beat you to it and claim a refund in your name. If you file sooner, you reduce that risk.

If you have self-employment income, you should also consider using an IRS EIN number in place of a Social Security Number to help limit the possibility of SSN theft.

And creating an IRS account online is 1 of the 5 government accounts everyone should create.

How Should I File my Taxes?

Last year, 151,448,000 of the 164,246,000 returns, or 92.2%, of returns were e-filed (impressive). E-filing is the quickest, safest, and most reliable way to file.

Where Should I E-file?

There are many cheap or free ways to e-file. Below are a few deals from the best vendors (with steep discounts via affiliate partnership offers):

My favorite (and my picks for the best tax software programs) are:

• H&R Block: $30 or $35 off at link on paid versions
• TurboTax: best available price at link on paid versions
• TaxSlayer: 25% off at link on paid versions
• TaxAct: 25% off at link on paid versions
• Cash App Taxes: free to use (formerly “Credit Karma Tax”, now owned by Square/Cash App)

Other popular tax prep programs include:

• FreeTaxUSA: lowest price at link on state e-file
• Liberty Tax: $10 or $15 off, varies by paid online version
• eSmartTax: $10 or $15 off, varies by paid online version
• E-file.com: 30% off at link

How Should I Pay My Taxes?

For reasons I just highlighted, I recommend that you pay your taxes online – it’s quicker, safer, more reliable, and can help prevent identity theft tax fraud.

There are ways to actually pay your taxes with a credit card and profit. With estimated tax payments, there are abundant opportunities to do so (if you do it wisely).

When can I Start Filing my Taxes this year?

The tax filing start date was Monday, January 23, 2023. So, long as you have all of the required income, deduction, and other tax forms you are expecting, you can begin filing your return ASAP.

When is the Tax Deadline?

This year’s IRS tax filing deadline is Tuesday, April 18 – with a few exceptions:

California, Georgia, and Alabama storm victims have until October 16, 2023, to file returns and pay any taxes that were originally due during this period. Check the IRS disaster relief page for further details.

The tax filing deadline AND payment deadline, if you are out of country, is Wednesday, June 15, 2023.

Note that these are the dates that you must have your return postmarked or e-filed.

If you have income from self-employment or other income that is not typically withheld, you may need to make estimated tax payments throughout the year.  The estimated payment due dates in 2023 are as follows:

What if I Need to File a Tax Extension?

If, for one reason or another, you are unable to file your tax return by the April 18 tax deadline, you can file for an IRS tax extension, which will extend the due date of your filing by 6 months (Monday, October 16, 2023). The extension must be postmarked by the April 18 deadline also.

Also, a key disclaimer – an extension of time to file is not an extension of time to pay. Any taxes due are still due on the normal filing deadline date. If you don’t pay by the deadline, you could owe interest and possibly a penalty on taxes owed.

How to File a Tax Extension

In order to file a tax extension, you will need to fill out IRS form 4868 by the tax deadline.

What if I Need to Amend my Tax Return?

If you’ve already filed your taxes, but later found your return to be incorrect or incomplete, here is how to file an amended tax return with the IRS. You may also need to file an amended state return.

Can I Still Lower my Tax Obligation for Last Year?

Yes. Even after a calendar year is over, there are still last minute tax deductions and credits that can lower your taxes, up until the tax deadline.

You can contribute to personal retirement accounts, such as a Roth or Traditional IRA, Keogh Plan, HSA (believe it or not), and SEP IRA. Contributions are considered tax-deductible since you will pay taxes on that income when you withdraw funds. The IRA contribution deadline and HSA contribution deadline are the same date as the tax deadline.

Contributing will lower your overall adjusted gross income (AGI) and potentially bring you a bigger return or cut the taxes you owe. And it’s an “above the line” deduction, which means that you do not need to itemize to claim it.

Make sure your income is eligible for these contributions, based on income level, before you contribute. If your income is low enough, you might also qualify for the Saver’s Credit for contributing to one of these types of retirement accounts.

However, it is too late to take advantage of many tax deductions for 2022, such as charitable contributions or employee contributions to tax advantaged accounts (e.g. employer-sponsored 401Ks, 403Bs, 457Bs). With few exceptions, the deadline to contribute was the final day of the calendar year.

Should I Take the Standard Deduction or Itemize My Taxes?

If you have a sizable amount of tax credits and deductions, it wouldn’t hurt to run the numbers to see if itemizing your taxes could result in a lower tax obligation for you versus a standard deduction. Itemizing deductions could even put you in to a lower tax bracket.

With the Tax Cut & Jobs Act enacted a few years ago, the standard deductions had nearly doubled, and significantly fewer taxpayers are itemizing deductions (only about 10% vs 40% previously).

The standard deductions for 2022 are:

• $12,950 for single filers
• $12,950 for married, filing separately
• $25,900 for married filing jointly
• $19,400 for head of household
• $0 personal exemption

If your itemized deductions don’t surpass those amounts, the standard deduction is the way to go (and it’s simpler).

The Most Popular Tax Deductions and Credits

If you did any of the following during 2022, it could impact your tax filing:

• If you made home energy efficiency improvements? You could qualify for an energy tax credit. The credits for efficiency home improvement for windows, doors, furnaces, etc. were retroactively restored for 2022 and expanded for 2023 in the Inflation Reduction Act. The sustainable credits for solar, fuel cells, wind, and geothermal were also restored to higher levels and expanded for 2023. New energy rebates were also created for 2023, with details rolling out later this year.
• Pay interest on a mortgage or property tax? Both are deductible. The state and local property, income, and sales taxes (SALT) deduction is capped at $10,000.
• Buy an electric or plug-in electric vehicle? You may be eligible for an electric vehicle tax credit from the IRS (and potentially receive a state electric vehicle tax credit too). The Inflation Reduction Act made some major changes to the credit for 2023. And, if you bought and took delivery of a qualified electric vehicle between August 17, 2022 and December 31, 2022, the vehicle also had to undergo final assembly in North America.
• If you have earned income below certain levels, you might be eligible for the Earned Income Tax Credit (EITC).
• If you sold investments at a loss and those losses were greater than your gains, you could claim a capital loss tax deduction.
• Have a child this year or act as guardian for at least half a year? You could claim a Child Tax Credit. The refundable amount has a slight increase versus older levels.
• Have self-employment income? You may be able to deduct business related expenses and your home office and can contribute a portion of your income to self-employment retirement accounts, such as a Solo 401K, SEP IRA, or SIMPLE IRA. And you may still be able to contribute for last year.
• Participate in the sharing economy? The IRS has created a Gig Economy tax guide to help you make sense of deductions (and income) that you should report.
• There is a 20% deduction for incomes from “pass-through” entities (partnerships, S Corps, sole proprietorships) for most business types.
• Contribute to an HSA outside of payroll? That’s deductible.
• Pay tuition or have other education related expenses? There are education tax credits and deductions that you can claim. Note that the “Tuition and Fees Deduction” was repealed for years 2021 and after.
• Make charitable donations? You can still deduct them if you itemize, but most will be better off claiming a standard deduction. Note that there is a IRS maximum charitable donation limit. Unfortunately, the universal charitable donation deduction has expired for 2022.

What if I Get a Refund?

Getting a tax refund is not a good thing. A refund is the equivalent of loaning your paycheck to the federal government, interest-free, over the prior year. And refunds typically result in a spending spree that I like to call Tax Refund Windfall Syndrome.

The average tax refund last year was $3,176. That’s $3,176 in interest-free loans from 108,622,000 lenders (aka taxpayers), for a combined $345 billion. This works out to just over 66% of returns resulting in a refund.

If you’re overpaying and want to stop giving out an interest-free loan to the government, use the new IRS withholding tax analyzer in coordination with the new W-4 form. The goal should be to aim for a slight amount due back to the government, without having to pay a penalty. That way, you’re the one getting the interest-free loan, and you have more money over the rest of the year that you can save in employer sponsored retirement accounts.

How Can I Check my Tax Refund Status?

If you start getting worried or just plain impatient, you can check on your tax refund status.

Beware of scams in the form of helping you check your refund status. Keep in mind that the IRS will never send you an email with this option. To check it, you should go to www.irs.gov and click ‘where’s my refund‘.

What is the Presidential Election Campaign Box on the 1040 Form?

Ever wonder what the ominous Presidential Election Campaign box on your 1040 form does and if it has an impact on your taxes due (or refund)? It has no impact on your tax filing, and the funds are the only source of public financing for Presidential primary and general elections. Funds also go towards pediatric cancer research through the NIH. So go ahead and check that box!

How Long Should you Keep your Tax Records?

There are varying opinions on how long to keep your tax records. I tend to err on the side of caution when it comes to being ready for possible audits. The IRS has a 3-year period of limitations, within which you can be audited or amend your returns.

However, if they have reason to believe that you have filed a fraudulent return or no return at all, they can audit you at any time. Some states have a statute of limitations that is longer that 3 years as well. So, I personally recommend keeping 3 years of paper documentation, but then going the extra step of digitizing documentation and keeping it stored securely in the cloud. It will help you sleep easier at night.

Tax Tips from Readers

Here are a few tips from readers from the H&R Block contest:

From Chris:

Given risk-free rates (Treasury rates) are currently 4% or higher, it actually matters to plan out your refund/tax payment. If you can swing it, plan on paying in so that you can earn some extra interest – not the other way around where the IRS earns interest off of you! Just be aware of the tax penalties for underpayment, which 20somethingfinance has written about before. The IRS only allows you to withhold so much.

From Nick:

I enjoy doing my own taxes. For the last 4 years, I volunteered with a local VITA program to get free training and help low-income people get free tax prep. It was a win win to be helpful while also learning more to help me prepare my own taxes, and learn more of the “why” numbers do what they do when you input the data.

From Justine:

My tip is to wait until you’ve received all documents needed. It can be a pain to have a corrected tax return so now I wait to make sure all my documents are received in the mail and via my online portals.

From Samuel:

My personal tax tip is next year are to know the income limits for married and filing jointly vs. married and filing separately. This is my first year not filing as a single, and we’re finding that some of the deductions cannot be claimed because our AGI exceeds the limit. Another tip is to take advantage of capital loss carryover for future years beyond this year.

From Ronald:

My tip is to select ‘direct deposit’ as the payment method on your tax refund. You’ll get it weeks or even months sooner than a check.

Thanks all, and happy filing!

2023 Tax Return Filing Discussion:

• Have you started or finished your tax return yet?
• How did you first learn how to do your taxes?
• Are you expecting a refund or taxes owed?
• What are your favorite tax tips?