Tax Season 2023: Here's how the Inflation Reduction Act might impact your refund this year
The Internal Revenue Service (IRS) kicked off the 2023 tax season on Jan. 23 with increased staffing thanks to funds it received under the Inflation Reduction Act, passed last August.
Under the legislation, the IRS received nearly $80 billion in funding intended to supplement the money that the government agency already receives. Some funding was earmarked for hiring more than 5,000 new telephone assistors and additional in-person staff to help taxpayers file this year, the IRS said.
The additional workforce means the IRS is better positioned to start the current tax season stronger, a recent report by the National Taxpayer Advocate said. It should help the IRS avoid the processing delays and "poor customer service" that taxpayers encountered in 2022 that led to delayed refunds.
"We continue to increase IRS staffing to help provide taxpayers with the information and assistance they need," Acting IRS Commissioner Doug O'Donnell said in a statement.
If you're interested in borrowing a personal loan to help you pay off debt at a lower interest rate, you can visit Credible to compare personal loan lenders and find the right option for you.
Gas prices spike as demand increases: AAA
Inflation Reduction Act will save consumers money on energy-efficient upgrades
The Inflation Reduction Act covers several credits and deductions that became available at the start of 2023, which could result in taxpayer savings next filing season.
For example, consumers that purchase a used electric vehicle may be eligible for a tax credit up to the lesser of $4,000 or 30% of the sales price, depending on their income, according to TurboTax.
Consumers buying a new electric vehicle are eligible for a tax credit of up to $7,500 as soon as the current tax filing season.
"Since credits are a dollar for dollar reduction of taxes you owe, you can lower your taxes by up to $7,500 and save money on gas," TurboTax said.
Households are also be eligible to claim credits on energy-efficient home improvements that include upgrades to electric panels, new doors, windows, skylights, and insulation that help regulate a home's temperature more efficiently. Eligible purchases are subject to per-item credit limits that are subject to a cap of $1,200, according to the U.S. Department of Energy.
Homeowners can claim a tax credit of up to 30% of the costs of up to $2,000 for heat pumps, heat pump water heaters, or biomass stoves.
Consumers purchasing residential energy-efficient properties like solar panels and solar water heaters for their homes can receive a tax credit of 30% of the cost of the property. This credit is available in most cases as soon as this current tax season.
And beginning this year, purchases for home backup power battery storage with a capacity of 3 kWh or greater will also be eligible for the tax credit.
If you are looking to reduce your expenses amid economic uncertainty, you could consider using a personal loan to pay down debt at a lower interest rate, saving you money each month. Visit Credible to find your personalized rate without affecting your credit score.
Home price gains slow to a two-year low: CoreLogic
A timeline on when to expect your refund
The tax deadline this year is April 18 and the IRS began accepting returns on Jan. 23. Tax filers typically receive their tax refund payments within two to three weeks, according to the IRS. Americans can check the status of their 2022 income tax refund 24 hours after filing electronically.
Early tax filers who are due a refund can expect to see their refund as early as mid or late February. However, for taxpayers claiming an Earned Income Tax Credit (EITC) or Child Tax Credit (CTC), those refunds will be released mid-February, even if they file on opening day. The IRS must confirm eligibility for those credits.
If you think you will receive a smaller refund this tax season but have debt you need to pay down, you could consider consolidating it with a personal loan. Visit Credible to find your personalized interest rate without affecting your credit score.
Have a finance-related question, but don't know who to ask? Email The Credible Money Expert at firstname.lastname@example.org and your question might be answered by Credible in our Money Expert column.