An analysis of 2022 tax returns revealed some trends in employment, investing and in the size of refunds that taxpayers receive. Lisa Greene-Lewis, CPA and TurboTax Live expert, explains how these insights may help you at tax time.
Watch the video above or read the transcript below.
Tracy Byrnes: So believe it or not, there’s some serious trends going on in the tax world these days. And TurboTax has been keeping track. Lisa Greene-Lewis CPA and TurboTax expert, is here with us right now. All right. So Lisa, before we dive into this data — because it’s really interesting — how did you gather it?
Lisa Greene-Lewis: Yes. So we issued a tax return report the end of last year looking at tax year 2022 tax returns to give us insight to what happened in 2022 and what’s to come. And we use aggregated and anonymized data to represent the full US population.
Tracy Byrnes: That’s amazing. OK, so clearly there’s some trends coming out in the employment world. What are you seeing?
Lisa Greene-Lewis: Yes. So we saw an indication of an increase in self-employment and side gigs, which we continue to see that. And in our data, we saw 8.1% of tax filers included a Form 1099-NEC or a 1099-K in their tax return. So that is indication of they have self-employed work.
Tracy Byrnes: It’s interesting, Lisa, that so many people are becoming self-employed. But there’s so much that comes with it. How do they keep track of everything?
Lisa Greene-Lewis: Yes. One thing I would recommend, keep track of all your business expenses that are directly related to your business. So you can save on your taxes. So things like computer equipment, if you drove your car for your business, and mileage, that’s a big one, or your home office, you want to keep track of those expenses so you can save on your overall taxes, as well as your self-employed taxes.
Tracy Byrnes: And now income, you’re saying there’s some serious trends in income as well.
Lisa Greene-Lewis: Yes. We saw some interesting data in that as well. So we saw that single filers with a dependent so that were claiming head of household, they saw an increase in their income of 8.6%. And in that, I just want to remind people if they did see those increases, there are ways to save on their taxes. So if you’re filing head of household, you can get a bump in your standard deduction. So this year for the tax filing season, the standard deduction if you’re single is $13,850. But if you file as head of household, you don’t want to forget that because it’s $20,800. So that’s one thing I just want to remind people of.
Tracy Byrnes: Yeah, super important. All right. In the investing world, you’ve seen some trends as well. What are they?
Lisa Greene-Lewis: So in the investing world, what we saw is 2.34% of tax filers reported crypto transactions. And that was a little bit lower than the previous year. The previous year was about 3%, which does kind of make sense with the previous year we saw a lot of people making a lot of money in crypto sales. So people may not have sold as much. One thing I do want to remind filers, of which I know you touched on in another segment, if you did experience crypto losses, you can offset those crypto losses against your gains. And then you can offset up to $3,000 of those losses against ordinary income like wages.
Tracy Byrnes: Right. Super important but even more important that you report these trades. Crypto trades are not for free. And finally, speaking of free, people are getting refunds back, aren’t they? What’s the trend there?
Lisa Greene-Lewis: Yes. So in tax year 2022, we did see lower refunds. And we heard reports of this in 2022 because of a lot of the Covid relief went away. So that’s one reason people were seeing those differences. And I do want to point that out. Coming into tax year 2023, we may see better outcomes because, like we talked about in another segment, the inflation adjustments were increased the most we’ve seen in decades. So that can help people’s tax outcome.
Tracy Byrnes:: So, Lisa, if I fall into some of this trend data, what can I do to help myself during tax time?
Lisa Greene-Lewis: Yes. If you have any of these life moves or life events, you can come to TurboTax. And you can either choose to do your taxes yourself. Or you can get help along the way and have your return reviewed by a TurboTax Live expert before you file. Or you can fully hand your taxes off to them. And they can do your taxes from start to finish. And then new this year, you can meet with a local tax pro in your area in person and have them do your taxes.
Tracy Byrnes: A lot of options, a lot of trends. Lisa Greene-Lewis, TurboTax expert and CPA. Thank you for sharing.
Lisa Greene-Lewis: Thank you for having me.
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