You can keep more money from the IRS next year, thanks to inflation

cigaretteman

HR King
May 29, 2001
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The Internal Revenue Service will allow Americans to shield more of their income from taxes in 2023 because of higher inflation, the agency announced Tuesday, raising income thresholds for all tax brackets and increasing the standard deduction.

The top tax rate of 37 percent will apply to individuals with income exceeding $578,125 and married couples filing jointly with income more than $693,750. Both of those amounts are up 7 percent from 2022 to track with increases in the consumer price index.


The standard deduction — the baseline amount of income that filers can collect tax free — will increase to $13,850 for individuals and $27,700 for married couples. It is the largest adjustment to deductions since 1985, when the IRS began annual automatic inflationary adjustments.


Certain parts of the tax code are tied to inflation to prevent rising prices from causing higher taxes. Taxpayers will see the new figures reflected in withholding statements on paychecks beginning in January, with workers securing more take-home pay.


The tax system changes follow a large cost of living adjustment, or COLA, announced by the Social Security Administration last week to compensate for inflation. Social Security benefits are set to jump 8.7 percent in 2023, the greatest such increase in four decades.
Social Security benefits will jump next year. Here’s why.
Several other elements of the tax code also are indexed to inflation. The maximum 2023 Earned Income Tax Credit, one of the federal government’s main anti-poverty measures, will be $7,430, up from $6,935 in 2022.

The annual gift tax exclusion — the maximum amount one person can give another without incurring a tax penalty will rise to $17,000 from $16,000. The estate tax threshold, often used by the wealthiest Americans to shield inherited assets from levies, will jump to $12.9 million from $12.1 million.
Yes, that letter from the IRS is real. You could be owed $1,400.
The IRS will also allow parents adopting a child to shield $15,950 per child from taxes, up from $14,890 in 2022.

 

Gonolz

HR Legend
Aug 6, 2002
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Yet, in a bad year for the stock market and a year of high inflation, capital losses are still limited to offsetting $3,000 of income ... the same amount as in 1976. If it were indexed for inflation, it would be over $15,000 this year.
 

seminole97

HR Legend
Jun 14, 2005
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“Both of those amounts are up 7 percent from 2022 to track with increases in the consumer price index.”

In September 2022, prices had increased by 8.2 percent compared to September 2021 according to the 12-month percentage of change in the consumer price index,
 
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Funky Bunch

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Yet, in a bad year for the stock market and a year of high inflation, capital losses are still limited to offsetting $3,000 of income ... the same amount as in 1976. If it were indexed for inflation, it would be over $15,000 this year.

This is so past overdue. At the very least, it should be doubled.
 
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tumorboy

HR Legend
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Sep 24, 2002
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Agreed. Why should the government subsidize the risk someone took in the market? You can offset gains with losses but you shouldn’t be able to offset income.
What about offsetting gains from prior years. Isn't there a 5 year limit currently?
 

cheeselog8

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Feb 7, 2013
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You cannot carry back capital losses but the carryforward is indefinite. Just don't die and it'll all work out eventually.
 

RileyHawk

HR Legend
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Lol you do understand that the system was made to benefit the market, not the individual, right?

You should just stick to using the laugh emoji reaction and stay out of these types of conversations.
I understand perfectly, I'm suggesting there are flaws and this is one of them.

That said, you can GFY.
 

GlenHawk

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I understand perfectly, I'm suggesting there are flaws and this is one of them.

That said, you can GFY.
Lol right. You claim you understand how it all works perfectly and then are suggesting that people not be allowed to offset capital losses. You call it a flaw LOL.

You realize the market wants investors to keep buying, right? Again, this is about the market, not the individual, so why do you think this piece is flawed? I'd love to hear your response.

Again, you have no idea what you're talking about and you prove that every single day on this board.
 

tumorboy

HR Legend
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Treat it all as ordinary income. Put some creative accountants out of work.
 

GlenHawk

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What about the standard deduction? Is that a flaw too?
This is the other piece I forgot to mention!

Riley doesn’t think investors should be able to offset losses but he’s totally cool with reaching in and taking a piece of their gains.

Riley’s uneducated opinions are clearly jaded by his political ideologies, and I’m sure he sees every market investor as a privileged white man just stealing from everyone else.
 
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theiacowtipper

HR Legend
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They don't have any problem participating in the gains.
That’s income. An investor is assuming some risk when they invest their money. They assume that risk because they have the potential for higher rates of return. Why should taxpayers subsidize that risk?

Edit to add. I’m fine with capital gains losses being offset by gains for that year, with higher losses being carried forward to offset future gains. I just don’t think it should offset regular income.

Capital gains income is treated differently by the irs. If it’s different it’s different. Separate it from regular income.
 

RileyHawk

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Lol right. You claim you understand how it all works perfectly and then are suggesting that people not be allowed to offset capital losses. You call it a flaw LOL.

You realize the market wants investors to keep buying, right? Again, this is about the market, not the individual, so why do you think this piece is flawed? I'd love to hear your response.

Again, you have no idea what you're talking about and you prove that every single day on this board.
Because tax collection is not about the market. Your speculative losses in the market should be your responsibility solely. Take the losses against any gains for that year but no further. While we're at it, get rid of the mortgage deduction as well. No reason the government should be subsidizing your borrowing.

The reason these things exist is for the wealthy to avoid taxes. They won't change to any significant degree because they have power and there's a LOT of money in keeping the tax code complex.

BTW, did I mention you should GFY? If not, GFY.
 

RileyHawk

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This is the other piece I forgot to mention!

Riley doesn’t think investors should be able to offset losses but he’s totally cool with reaching in and taking a piece of their gains.

Riley’s uneducated opinions are clearly jaded by his political ideologies, and I’m sure he sees every market investor as a privileged white man just stealing from everyone else.
WTF are you babbling about now? Taxes are owed on income received. There's no provision stating that the government needs to subsidize someone's losses. It's one of the flaws that the wealthy take advantage of to avoid paying taxes.

Do you know any wealthy people? Based on your comments it appears you don't.
 
May 27, 2009
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WTF are you babbling about now? Taxes are owed on income received. There's no provision stating that the government needs to subsidize someone's losses. It's one of the flaws that the wealthy take advantage of to avoid paying taxes.

Do you know any wealthy people? Based on your comments it appears you don't.
Taxes are owed on income received??? What about sales tax? What about property tax? What about payroll taxes that employers have to pay on top of the wages they pay to their employees?

Taxes aren't always based on income received, you effing twat.
 

RileyHawk

HR Legend
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Taxes are owed on income received??? What about sales tax? What about property tax? What about payroll taxes that employers have to pay on top of the wages they pay to their employees?

Taxes aren't always based on income received, you effing twat.
You are a complete moron. No one said all taxes are based on income - income taxes are.

You've proven over a long time what a complete imbecile you are. Carry on playing with yourself.
 

theiacowtipper

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Feb 17, 2004
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Because risk taking is what employs basically everyone in this entire country in some form or another.
But that’s not the primary purpose of investing. The primary purpose is to make money. Investors want it both ways. The want a higher rate of return and they want taxpayers to assume at least part of the risk. They want special tax treatment when they make bad decisions seeking a higher rate of return.
 
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Funky Bunch

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notlongago

HR Heisman
Jul 28, 2012
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But that’s not the primary purpose of investing. The primary purpose is to make money. Investors want it both ways. The want a higher rate of return and they want taxpayers to assume at least part of the risk. They want special tax treatment when they make bad decisions seeking a higher rate of return.
Maybe taxpayers shouldn't get any of the benefits of their risks then?