Do You Know More About Taxes Than Most Americans? Find Out!
How much of the federal government's revenue is expected to come from personal income taxes in 2023?
The federal government's fiscal year runs from October to September. During FY 2023 (October 1st, 2022 - September 30th, 2023), about half of the federal government's funding is expected to come from personal income taxes. About 49% — or approximately $289 billion!3
Other funding sources like Social Security taxes, corporate income tax, excise tax, and estate taxes make up the remaining 51%.
True or False: I can take the standard deduction if I itemize my tax deductions.
"The standard deduction isn't available to certain taxpayers. You can't take the standard deduction if you itemize your deductions."5
That said, the standard deduction has been increased in 2023 — to $27,700 for married couples filing jointly and $13,850 for single taxpayers.6
Which strategy will NOT reduce your tax bill?
Answer: Filing for a tax extension
While filing an extension can give you more time to prepare and file your tax return, it may not change or reduce those obligations (unless you use that extra time to exercise options that could reduce your tax bill).4
Did you catch this exception?
While donating to a charity can reduce your tax liability, it will ONLY reduce your taxable income IF you itemize deductions on Schedule A. With a standard deduction, charitable donations do not reduce the amount of tax due.
True or False: Tax brackets will stay the same in 2023 as they were in 2022.
The IRS has released higher federal tax brackets for 2023 to adjust for inflation. The top tax rate remains 37% for taxpayers with income over $578,125 ($693,750 for married couples filing jointly), but the other tax rates have been raised for 2023 to reduce the burden of inflation.6
How long does it take the IRS to issue tax refunds?
Answer: 21 days
The IRS issues most refunds in less than 21 days. However, the IRS (and I!) caution against relying on receiving federal tax refunds by a certain date, especially when making major purchases or paying bills. Some returns may require additional review, especially if the IRS flags errors, possible identity theft, or potential fraud.7
True or False: The IRS will text or email me regarding tax delinquency or to verify certain information.
According to the IRS, it "does not initiate contact with taxpayers by email to request personal or financial information. The IRS initiates most contacts through regular mail."8 Generally, if the IRS needs more information or if you're delinquent on your taxes, you'll receive a letter (or several letters over time). Though it rarely reaches out by phone, the IRS may call you for certain types of tax delinquency issues.
Watch out for scams like texts threatening to "suspend" your Social Security number or emails that use urgent stories related to the COVID-19 pandemic to try to get you to open a link or attachment.9
After I file my taxes, I should keep my tax returns and supporting documents
Answer: For at least 3 years
Retaining tax returns and supporting documents for at least 3 years is recommended. Keeping your tax documents allows you to use previous years' tax information on the current year's forms — eliminating unnecessary calculations! This information is also crucial in case of an audit.4