Preparing your taxes can be a confusing and overwhelming process. There are many forms to fill out and laws to follow. But one of the most frustrating aspects of tax season is learning about the changes in tax laws.
That's why hiring a professional Brooklyn CPA is important when tax season comes around. They know the ins and outs of current tax law and can prepare your taxes to ensure 100 percent compliance.
Tax laws can change every year. While the core regulations usually stay the same, a few details can vary from year to year.
Standard Deductions
One part of tax law that typically changes annually is the standard deduction. The standard deduction is a dollar amount you can subtract from your taxable income. While you can make itemized deductions, the standard deduction works best for most people.
The reason why the standard deduction changes every year is because of inflation. It increases a small amount. For example, the standard deduction for individuals in the 2023 tax year is $13,850. That's a $900 increase from the standard deduction in 2022.
Tax Brackets
Another tax law that can change yearly is tax brackets. Like the standard deduction, tax brackets see minor increases to account for inflation.
A tax bracket reflects how much you owe in federal taxes based on your adjusted gross income. Bracket changes are minor but can be significant if you're near the threshold. Increases could move those previously on the bottom of a tax bracket down to the lower one.
Major Changes
While major changes to tax laws don't come annually, there were a few in 2022. The pandemic saw temporary expansions to child tax credits. Those expansions helped put more money into the pockets of people affected by the pandemic and its economic impacts. In 2022, those credits returned to what they were pre-pandemic. Therefore, fewer people will qualify for the credit. Those that do may also see a smaller return.
If you need help navigating tax law changes, don't hesitate to go to a Brooklyn CPA. Professionals study tax laws and stay updated on changes, passing that knowledge on to you to ensure you do your taxes correctly.
Read a similar article about Bronx CPA here at this page.
