Jackson Hewitt tax expert talks tips, pitfalls in filing your 2023 tax return

Cora Neas
·3 min read

AUSTIN (KXAN) — It’s tax season again, and some Americans already have started working on their returns. But changes to federal tax law, including the sunsetting of 2017 tax cuts and increases to the earned income credit, could lead to a different post-filing situation for many Americans.

Mark Steber, chief tax information officer for the tax-preparation service Jackson Hewitt, calls tax filings the “single largest financial transaction” for most Americans. According to him, the biggest impact on that transaction will come from “life change” credits.

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“2023 certainly had its number of changes. There’s a fair share of tax law changes, legislative changes, inflationary adjustments,” Steber said. “But bigger than the tax law changes for 2023, and typically every year, are our life changes. I always tell folks, certainly be aware of tax law changes, but look to your life changes for a bigger impact on your tax return.”

Some of these credits include:

  • Getting married or divorced;

  • New child or children, including adoption and fostering;

  • Starting a new job, or losing a job;

  • Investing, including into cryptocurrency;

  • Moved residence or into your first home; and more.

The two life changes with the largest impact, according to Steber, are a new child and starting a side job.

Mistakes to avoid

As for pitfalls, Steber says the most common mistake is rushing through the process.

“The bigger mistake that I see is the mistake of omission. One in five people fail to claim the earned income credit every year, and that’s a credit worth well over $6000 at the maximum,” Steber said. “If you leave off a benefit, if you leave off a credit on your tax return, if you leave off a deduction that you’re able to take, the IRS does not come in, clean that up and then send you more money. You leave off a benefit, it stays off, and that money is gone forever until you take action or amend it.”

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Omission can also include not reporting “hobby income” or not reporting dividends from investments and cryptocurrency. Specifically for recent arrivals to Texas, a state that doesn’t levy a state income tax, Steber says not to forget your tax burden to a prior state; if you worked in another state, you may need to still pay state income tax for that state.

“Don’t just say that because you moved to a great state like Texas, that your tax responsibilities are over from a state perspective, it really depends on when and how you moved and what your relationship is with another state,” he said. “States are getting very sophisticated with locating people who are doing business in their state, whether they’re an employee there, selling or other relationship, and finding those taxpayers, and that’s usually not good after the fact.”

Steber recommends that taxpayers in complex situations turn to a tax preparation service if they need help or just for a “check up.”

“I certainly understand the independence of doing taxes on your own and that’s a fine option,” he said. “Personally, as a lifetime CPA, I’ve seen a lot more mistakes made by people who don’t put in the effort, take a shortcut and listen to ‘Uncle Bob’ the tax pro with his internet advice. If you think that you don’t want to cut your own hair, you don’t want to do your own electrical, you don’t want to do your own medical, and you just want to give attention to your largest single financial transaction to a trained, experienced, guaranteed and even convenient tax professional.”

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