Chances are you are one of the more than 16.5 million Californian’s who received the Middle Class Tax Refund. Eligibility is determined by current California residency, timely filing of 2020 taxes and a few other items. For full details and additional information, refer to the Information page on the Franchise Tax Board’s website.
If you’re like many of our clients you may be wondering is this taxable? In short, no, the Middle Class Tax Refund will not be considered taxable income by the State of California. The IRS also recently weighed in and is in agreement; the refund will not be taxable. Keep in mind, if you received the refund after January 1, 2023 you won’t need to worry about it until next year.
2023 Tax Filing Tips
The complexity of your tax situation is the most significant factor when deciding on how to file your taxes. If you watch TV, listen to the radio or go online, chances are high that you already feel a bit bombarded by ads for do-it-yourself tax software. When it comes to filing your taxes, you have plenty of choices including free online programs, paid software and even hiring a tax professional. But how do you know which one is best for you?
Generally, the more complex your tax situation is the better off you’ll be going with a tax professional. If you’ve made up your mind to do it yourself, understand that filing your taxes can be time consuming so be sure to give yourself plenty of time to gather the necessary documents and file. The IRS estimates it takes the average self-filer between eight and 12 hours to gather the needed forms and file on their own.
So when should you consider hiring a professional? If you’re a high income earner, self-employed (yes, this includes those in the gig economy), a professional, or would rather not deal with the risks, then hiring a tax pro will go a long way to ensure that you are getting all of the deductions you are entitled to.
If you had a major life event, like a big move, job change, marriage or divorce, or had a child, then having a tax pro will help you make sure you don’t miss out on any deductions or credits.
If you own rental property or have foreign investments, these forms can get tricky when claiming losses or just trying to make sure you’re following the rules. Hiring a tax professional is worth it.