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Financial Planning > Tax Planning > IRS Updates

IRS Highlights Shrinking Tax Credits, Third-Party Payment Changes for 2023

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The Internal Revenue Service on Tuesday reminded taxpayers of new rules that kick in next year as well as tax credits that will revert to previous levels and eligibility changes that took effect under new laws.

To help taxpayers prepare for the 2023 filing season, the agency has updated its ”Get Ready” page on

Some tax credits will return to 2019 levels. “This means that affected taxpayers will likely receive a significantly smaller refund compared with the previous tax year,” the IRS said.

As explained by the IRS, changes include amounts for the Child Tax Credit (CTC), Earned Income Tax Credit (EITC) and Child and Dependent Care Credit, and are as follows:

  • Those who received $3,600 per dependent in 2021 for the CTC will, if eligible, get $2,000 for the 2022 tax year.
  • For the EITC, eligible taxpayers with no children who received roughly $1,500 in 2021 will get $500 for 2022.
  • The Child and Dependent Care Credit returns to a maximum of $2,100 in 2022, from $8,000 in 2021.

The IRS also reminds taxpayers that there are no more above-the-line charitable deductions.

“During COVID, taxpayers could take up to a $600 charitable donation tax deduction on their tax returns. However, in 2022, those who take a standard deduction may not take an above-the-line deduction for charitable donations,” the IRS said.

For tax year 2022, taxpayers may still qualify for temporarily expanded eligibility for the premium tax credit, the IRS said.

The IRS states that it will soon mail letters on behalf of the Center for Medicare & Medicaid Services, sharing information about obtaining marketplace health care coverage.

The premium tax credit, or PTC, the IRS explains “is a refundable credit that helps eligible individuals and families cover the premiums for their health insurance purchased through the Health Insurance Marketplace.”

To get this credit, a taxpayer must meet certain requirements and file a tax return with Form 8962, PTC.

For tax years 2021 and 2022, the American Rescue Plan Act of 2021, or ARPA, “temporarily expanded eligibility for the premium tax credit by eliminating the rule that a taxpayer with household income above 400% of the federal poverty line cannot qualify for a premium tax credit,” the IRS explains.

Eligibility rules changed as well in order to claim a tax credit for clean vehicles.

Taxpayers interested in claiming the tax credit available under section 30D (EV credit) for purchasing a new electric vehicle after Aug. 16, 2022 — the date that the Inflation Reduction Act of 2022 was enacted — “a tax credit is generally available only for qualifying electric vehicles for which final assembly occurred in North America,” the IRS said.

Reporting rules changed for Form 1099-K.

Taxpayers should receive Form 1099-K, Payment Card and Third Party Network Transactions, by Jan. 31, 2023, if they received third-party payments in tax year 2022 for goods and services that exceeded $600, the IRS explains.

Third-party networks include services like PayPal, Venmo and CashApp that settle payment card transactions. They also include auction payment facilitators and marketplaces such as eBay and Etsy, or gig worker platforms like Uber and Lyft.

“There’s no change to the taxability of income,” the IRS said. “All income, including from part-time work, side jobs or the sale of goods is still taxable. Taxpayers must report all income on their tax return unless it’s excluded by law, whether they receive a Form 1099-K, a Form 1099-NEC, Nonemployee Compensation, or any other information return.”

Finally, the last quarterly payment for 2022 is due on Jan. 17, the IRS said.

“Taxpayers may need to consider estimated or additional tax payments due to non-wage income from unemployment, self-employment, annuity income or even digital assets,” the IRS relayed.

The IRS recommends the Tax Withholding Estimator on, which the agency said “can help wage earners determine if there is a need to consider an additional tax payment to avoid an unexpected tax bill when they file.”


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