How to Prepare for the 2023 Tax Filing Season

It’s hard to believe it will be time to file 2023 taxes in two months. As Roseville financial advisors, we help individuals and families manage their finances and create tax-efficient investment strategies that can help ease the pain of tax season.

Our article includes a few tips you can use to ensure you are maximizing potential deductions while also addressing any major life events that occurred in 2023 that may impact your taxes. 


Listen to our podcast: How to Avoid Large Tax Surprises!


Get Your Paperwork in Order

Before filing your taxes, it’s important to collect all the necessary documents that will be used for your tax filings. This can include specific statements, receipts as well as various reporting documents that will be used to report your taxes: 

  • A W-2 if you are employed
  • A 1099-NEC if you are an independent contractor
  • An SSA 1099 if you are receiving Social Security benefits
  • A 1099-INT if you are reporting on interest earned
  • A 1099-DIV if you are reporting on dividends received
  • A 1098 to report mortgage interest you paid
  • A W-2G if you have any gambling winnings to report

Understanding What 2023 Tax Law Changes May Impact You

Each year brings adjustments in tax regulations that can significantly affect your filings. While there haven’t been dramatic changes this year, there are a few updates in 2023 that could impact your returns:

  1. Tax brackets have been slightly adjusted to account for recent inflation. For single filers and married couples taking on taxes together, the brackets range from 10% for the lowest earners (up to $11,000 for singles and $22,000 for joint filers) to 37% for those at the top end (over $578,125 for singles and $693,751 for couples).
  2. The standard deduction amount increased a bit. If you are single or married filing jointly, the deduction is $13,850. If you are head of household, you are eligible for a deduction of $20,800; if you are married and filing jointly, the deduction is $27,700. 
  3. When it comes to itemizing deductions, not much has changed. You’ll still need to weigh the potential benefits of itemizing versus the standard deduction. 
  4. Don’t forget that you can contribute $6,500 into a traditional IRA, plus a $1,000 catch-up contribution if you are 50 or older, before April 15th for 2023 purposes.
  5. You can also contribute to a Health Savings Account (HSA) before April 15 for the prior year. As an individual, you can contribute $3,850 or $7,750 for families. And if you’re 55 or older, you can add $1,000 as a catch-up contribution.
  6. The Child Tax Credit remains at $2,000 per child under 17, with phase-outs starting at $400,000 for joint filers and $200,000 for single filers. There’s also a $500 credit available for other dependents.

Don’t Forget About Required Minimum Distributions (RMDs)

Required Minimum Distributions (RMDs) are amounts that U.S. tax law requires individuals to withdraw annually from their retirement accounts after reaching a certain age, currently set at 72. RMDs apply to various retirement accounts, including IRAs, 401(k)s, and other tax-deferred retirement savings accounts.

The IRS provides RMD tables to help you determine the amount to be withdrawn each year. These tables use your age and account balance as of December 31 of the previous year to calculate the RMD. The tables offer a “distribution period” factor based on the account holder’s age, which divides the account balance, thus determining the RMD amount.

For example, for a 74-year-old with a $1,000,000 IRA, the RMD for 2024 would be calculated using the IRS Uniform Lifetime Table. Assuming the distribution period factor for a 74-year-old is 23.8 (this factor can vary slightly each year as the IRS updates tables), the calculation would be $42,016, the minimum amount they must withdraw from their IRA for that year to comply with IRS rules.

As Roseville financial planners, we specialize in helping our clients develop tax-efficient RMD strategies.

Known Deductions

Beyond the well-known deductions, there are often overlooked opportunities that may potentially lower your tax liability. 

For example, deductions for certain educational expenses, energy-efficient home improvements, and medical costs exceeding a certain percentage of your income may potentially be beneficial. It’s worth taking the time to research or consult a tax professional about these potential savings.

Reviewing Your Previous Year’s Return

Review your tax return from the prior year, as it can remind you of the deductions and credits you previously claimed and help you spot recurring income or deductions. This review may help ensure consistency and help identify areas where your situation may have changed.

Major Life Events

Life events such as marriage, divorce, the birth of a child, or purchasing a home can have significant tax implications. These events can alter your filing status, credit eligibility, and more. Understanding how these changes may affect your tax situation is crucial to accurately making informed decisions and filing.

About Bulman Wealth

At Bulman Wealth Group, we specialize in helping individuals and families pursue a fulfilling retirement. We’re here for clients all across California, ready to help with your retirement planning journey.

Our mission is simple: to craft clear, straightforward retirement plans. As fiduciaries, your best interests are at the heart of everything we do. You might be wondering what exactly being a fiduciary means. 

Simply, it means we’re legally obligated to prioritize your needs above all else. If you’re approaching retirement or already there and looking for a retirement plan that makes sense, why set up a quick 15-minute chat with us to see if we are the right fit?

All content is for information purposes only. It is not intended to provide any tax or legal advice or provide the basis for any financial decisions. Nor is it intended to be a projection of current or future performance or an indication of future results.

Opinions expressed herein are solely those of Chris Bulman Inc. dba Bulman Wealth Group and our editorial staff. The information contained in this material has been derived from sources believed to be reliable but is not guaranteed as to accuracy and completeness and does not purport to be a complete analysis of the materials discussed. All information and ideas should be discussed in detail with your individual advisor prior to implementation. Investment advisory services are offered through Chris Bulman Inc dba Bulman Wealth Group, an SEC Registered Investment Advisor. Insurance products and services are offered through Chris Bulman, Inc. dba BWG Insurance Agency and Ameritas Life Insurance Corp., CA State Insurance License # 0M46922. Being registered as an investment advisor does not imply a certain level of skill or training.

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