The federal tax deadline is officially one month away for most filers — and experts say there are some key things to know this season.
As of March 1, the IRS received roughly 54 million individual returns, which is less than 40% of the 146 million expected this season, according to the agency.
So far, the average refund is $3,182, up about 5% from the same period last year. Of course, the average may change as more returns flood in.
Cavan Images | Getty Images
1. You have several free tax-filing options
This season, taxpayers have several free filing options, including the IRS Direct File pilot, a program directly through the agency, which fully opened on Tuesday to certain taxpayers in 12 states.
You may also opt for IRS Free File, a partnership between the IRS and a nonprofit coalition of eight software partners. For 2023, you can use Free File with an adjusted gross income of $79,000 or less, up from $73,000 in 2022.
Other free filing options include Volunteer Income Tax Assistance, Tax Counseling for the Elderly, MilTax and private company software.
2. See if you can claim a credit that millions ‘overlook’
Nearly 1 in 5 eligible taxpayers miss the earned income tax credit, or EITC, a tax break for low- to moderate-income workers that averaged $2,541 last season, according to IRS Commissioner Danny Werfel.
“This is a lot of money” and millions of Americans “simply overlook it,” he told reporters on a press call in January.
For tax year 2023, the EITC is worth up to $7,430 per family with three or more children, up from $6,935 in 2022. Eligible workers between ages 25 and 64 without a qualifying child can receive up to $600.
Some filers may also be eligible for tax credits for buying a vehicle or making home energy improvements in 2023, according to the IRS.
3. There’s still time to lower your tax bill
After Dec. 31, “the toolbox of options is much smaller” for lowering your tax bill or boosting your refund for that tax year, said certified financial planner and enrolled agent John Loyd, owner at The Wealth Planner in Fort Worth, Texas. But there are still strategies you can employ.
One of the first choices is typically pretax individual retirement account contributions, which may offer a deduction, depending on your workplace plan participation and income. Similarly, you could snag a tax break by making contributions to a spousal IRA.
The limit is $6,500 per account (with an additional $1,000 if you’re age 50 or older) and you have until the tax deadline for 2023 contributions. Depending on your income, you could also qualify for the saver’s credit for making those retirement contributions, worth up to 10%, 20% or 50% of your deposit.
There’s also still time for 2023 health savings account contributions, assuming you have an eligible high-deductible health insurance plan. HSAs offer triple tax breaks with an upfront deduction, tax-free growth and tax-free withdrawals for eligible medical expenses.
— CNBC’s Sharon Epperson contributed reporting.