IRS Announces Start of 2023 Tax Season: Here Are Some Key Changes

Agency warns taxpayers to make 2022 fourth quarter payments to avoid 'surprise'

A copy of an IRS 1040 tax form is seen at an H&R Block office in Miami, Fla., on Dec. 22, 2017. (Joe Raedle/Getty Images)

The Internal Revenue Service announced Thursday that the agency will begin accepting 2022 tax returns on Jan. 23 and that April 18 is the deadline to file taxes.

In a news release, the agency said it expects that 168 million individual tax returns will be filed this year, and the "vast majority" will be filed before the April 18 deadline. "People have three extra days to file this year due to the calendar," it said, adding that people requesting an extension will have until Oct. 16 to file.

The agency used the news release to tout last year's passage of the Inflation Reduction Act, which Republicans say would allow for the hiring of 87,000 new IRS personnel—although Democrats say that such hiring initiatives are needed to deal with IRS backlogs. House GOP lawmakers this week proposed a bill to rescind that funding.

"This filing season is the first to benefit the IRS and our nation's tax system from multi-year funding in the Inflation Reduction Act," said acting IRS Commissioner Doug O'Donnell in a statement. "With these new additional resources, taxpayers and tax professionals will see improvements in many areas of the agency this year."

O'Donnell added that the IRS has "trained thousands of new employees to answer phones and help people. While much work remains after several difficult years, we expect people to experience improvements this tax season. That's just the start as we work to add new long-term transformation efforts that will make things even smoother in future years. We are very excited to begin to deliver what taxpayers want and our employees know we could do with this funding."

Free tax filing services can be anyone who made $73,000 or less in 2022 starting on Jan. 13, according to the release. But those returns won’t be processed until the 2023 tax season starts later in January, it said.

"These steps took place as the IRS worked for months to prepare for the 2023 tax season. The January 23 start date for individual tax return filers allows the IRS time to perform annual updates and readiness work that are critical to ensuring IRS systems run smoothly," the agency said. "This is the date IRS systems officially begin accepting tax returns. Many software providers and tax professionals are already accepting tax returns; they will transmit those returns to the IRS when the agency begins accepting tax returns on January 23."

'Surprise'

Several weeks ago, the agency issued a reminder to taxpayers to avoid a "surprise" penalty by making fourth-quarter estimated tax payments by next week's deadline of Jan. 17. Americans who didn't pay enough taxes in 2022 should make that payment on Jan. 17 or before, said the IRS in a news release. If they did not, they risk paying more when they file in 2023.

The Internal Revenue Service (IRS) building in Washington on Feb. 19, 2014. (Jim Watson/AFP/Getty Images)

"Either payment method—withholding or estimated tax payments—or a combination of the two, can help avoid a surprise tax bill at tax time and the accompanying penalty that often applies," the IRS said.

Taxpayers, according to the IRS, can choose to withhold taxes from their income or they have the option of making estimated payments four times per year or a combination of both. Those who don't make the tax payments owe interest and a penalty of 0.5 percent to the amount owed until up to 25 percent total.

Other Changes

A controversial rule was enacted under the American Rescue Plan of 2021 that would have required anyone who earned $600 or more via online platforms like PayPal, Etsy, eBay, and Venmo to report their earnings. However, days before the New Year, the IRS announced that it delayed the reporting rule by another year at the least.

Top officials noted that the reporting requirement sparked widespread confusion.

“The additional time will help reduce confusion during the coming 2023 tax filing season and provide more time for taxpayers to prepare and understand the new reporting requirements,” O’Donnell told the Wall Street Journal.

"The IRS and Treasury heard a number of concerns regarding the timeline of implementation of these changes under the American Rescue Plan,” O’Donnel told the New York Times. “To help smooth the transition and ensure clarity for taxpayers, tax professionals, and industry, the IRS will delay implementation of the 1099-K changes.”