One of life’s certainties is taxes. Patrick Hopkins, assistant professor of accounting in the Neeley School of Business, spoke with TCU News to provide insight on successful tax preparation.
What is new this year – or something people might want to be aware of – when preparing
their 2023 tax return? 
The Internal Revenue Service is launching its cloud-based software program, Direct
File, to file federal income tax returns. Texas is one of 12 states participating
in this software launch. However, the software can only handle simpler returns at
this point. So, if you don’t itemize and your income only consists of W-2 forms, Social
Security, unemployment or interest income, then I definitely recommend checking it
out. The IRS website has more information on Direct File. If you do not live in one of the 12 states participating in this software launch,
you can still prepare and file your return for free at several online tax preparation
websites. However, to qualify for this option, your income (technically, your adjusted
gross income) must be less than $79,000 in 2023.
With several numbers being bumped up this year to adjust for inflation, is there anything
people might consider doing differently?
The standard deduction is increasing to $27,700 for married taxpayers and $13,850
for singles. Therefore, it is harder to benefit from itemizing allowable deductions
(reducing your taxable income for medical expenses, property taxes, mortgage interest,
charitable contributions, etc.). So, before spending too much time gathering information
to calculate an itemized deduction, ask yourself if you have allowable deductions
that exceed the standard deduction. If not, take the standard deduction and enjoy
a simpler tax filing process.
What advice do you give people who are debating between preparing their own taxes,
using a tax prep service or using a CPA?
If you own a business or are considered an independent contractor (you received a
1099-MISC or 1099-NEC), I advise seeking a qualified professional to help you file
your tax return. However, if you only have W-2 income, I would suggest preparing the
return on your own.
What is the most common tax prep mistake you hear of?
The most common mistake or misunderstanding I saw in practice is the belief that everything
is deductible if it relates to your business or job. The Internal Revenue Code contains
numerous statutes that limit the ability to deduct various expenses arising in the
course of business. One statute that may be of interest to the average person is that
unreimbursed employee expenses are no longer deductible in the United States. So,
if you pay for something out of your pocket for your employer, make sure they reimburse
you. The reimbursement is not taxable.
Are there any other tips you have for our readers?
The average American has annual medical expenses (doctor visits, prescriptions, etc.).
However, the average American will not receive any tax benefit from having these expenses.
This occurs for numerous reasons, such as not meeting the threshold for unreimbursed
medical expenses or not having enough deductions to itemize. So, if you pay someone
to prepare your taxes, and they charge for their time, giving them your medical receipts
is likely not worth your effort or money unless the medical expenses are unreimbursed
and exceed 10% of your income.