A Guide to Understanding and Managing Taxes in South Carolina

A Guide to Understanding and Managing Taxes

In this article, you can discover:

  • Changes to the Child Tax Credit, Earned Income Tax Credit, and Child Independent Care Credit may affect taxpayers’ refunds
  • The charitable donation tax reduction of up to $600 has expired and itemizing deductions may be necessary to claim charitable donation deductions
  • The Premium Tax Credit (PTC) is a potentially risky credit available to certain taxpayers in 2023
  • The Inflation Reduction Act of 2022 may provide relief for taxes owed in future years, but its primary impact will likely be felt in 2023 and beyond
Will Changes To Child Tax Credit, Earned Income Tax Credit, Or Child Independent Care Credit Result In A Decrease In Refunds For Taxpayers?

The recent changes to the Child Tax Credit, Earned Income Tax Credit, and Child Independent Care Credit have created a mixed bag of results for taxpayers. The Child Tax Credit has decreased from $3,600 to $2,000, which may negatively impact refunds.

However, the Earned Income Tax Credit has increased the amount that can be earned while still receiving the credit to over $57,000, which may increase refunds for some taxpayers. The Child Credit is available to children under the age of 13 or dependent handicapped individuals and allows for a credit of up to 35% of up to $3,000. The effect of these changes on an individual taxpayer’s refund will vary on a case-by-case basis.

Has The Temporary Charitable Donation Tax Reduction Of Up To $600 That Was Implemented During The Height Of The COVID-19 Pandemic Expired?

The temporary charitable donation tax reduction of up to $600 implemented during COVID has expired. This means taxpayers who take the standard deduction can no longer claim this above-the-line deduction for charitable donations.

However, it is still possible to claim charitable donation deductions by itemizing deductions on the tax return. To do this, the taxpayer must itemize their deductions rather than taking the standard deduction. For many taxpayers, the standard deduction may provide a greater benefit than claiming charitable donation deductions.

What Is The Premium Tax Credit (PTC), And Is It Still Available In 2023?

The Premium Tax Credit (PTC) is a refundable credit that is available to certain taxpayers who purchase marketplace insurance. The credit helps to lower the cost of the insurance premium by providing credit towards the premium payment.

Additionally, because the credit is refundable, some taxpayers may have to pay back a portion or all of the credit if their economic situation improves during the year. (For example, if they receive an inheritance or a raise at work.) The PTC is available to taxpayers with an income of less than 400% of the poverty level. It is important to note that the PTC is a potentially risky credit, as taxpayers may have to pay back some or all of the credit if their economic situation improves during the year.

Will The Inflation Reduction Act Of 2022 Reduce Taxes Owed In The 2022 And 2023 Filing Seasons?

The Inflation Reduction Act of 2022 is primarily focused on reducing costs for medical expenses and prescriptions. While it may provide some relief for taxpayers in the 2022 filing season, its primary impact will likely be felt in future years, such as 2023, 2024, and 2025.

Has The IRS Announced Changes To The 2023 Standard Deductions And Tax Brackets?

The IRS has announced changes to the 2023 standard deductions and tax brackets. These changes may affect the amount of tax that a taxpayer owes. One strategy that some taxpayers may consider implementing is working with a tax attorney to plan their earnings in a way that takes advantage of the changes to the tax brackets. This may involve shifting earnings between tax years to stay in a lower tax bracket or to take advantage of the increased floor and ceiling for certain tax brackets. The appropriate strategy will depend on an individual taxpayer’s specific circumstances and should be evaluated on a case-by-case basis.

Can A Tax Attorney Help You Prepare For A Tax Bill If You Owe More Than You Can Pay?

If you realize that you will owe more money on your tax return than you can pay when you file your 2022 taxes, it is important to take action as soon as possible. One option is to make an estimated tax payment before January 15th, which can help to reduce the amount of interest and penalties that you may owe.

A tax attorney can help you to ensure that the estimated payment is applied to the correct tax return and can also assist with setting up a payment plan to pay off the tax debt over time. Working with a tax attorney can help to ensure that you are taking the appropriate steps to address your tax debt and avoid additional interest and penalties.

Are There Tax Planning Strategies That Can Help 1099 Workers Or Other Independent Contractors To Reduce Their Tax Obligation In 2023?

There may be tax planning strategies that can help 1099 workers or other independent contractors reduce taxes due in 2023. One option for workers who are paid as contractors by one or two primary companies is to ask to be paid as a salary with taxes withheld.

This can help to eliminate the self-employment tax that would otherwise be due on 1099 income. Another important strategy for independent contractors is to pay estimated yearly taxes to avoid underpayment penalties and other penalties. Estimated taxes are due on April 15th, June 15th, September 15th, and January 15th of the following year. By paying estimated taxes regularly, independent contractors can help to ensure that they are properly accounting for their tax liability and avoid additional penalties.

With the guidance of a skilled attorney for Estate Planning Law, you can have the peace of mind that comes with knowing that we’ll make it look easy.  For more information on Estate Planning Law in South Carolina, a free initial consultation is your next best step. Get the information and legal answers you seek by calling (864) 271-7940 today.

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