It’s been a month since tax season ended. Let’s start preparing for tax season 2023 by looking at the early tax changes for the tax year 2022. Here are the changes that have been announced so far.
Tax Programs Expiring in 2022
There are many tax programs that were created or changed to combat the effects of the coronavirus pandemic and ran through the tax year 2021, but many of them have expired.
Here’s a short list:
- Child Tax Credit – drops back to $2,000 per child (in 2021, it was $3,000 for 6- to 17-year-old children and $3,600 for children 5 and younger
- Child & dependent care credit – percentage dropped from 50% to 35% maximum and is now non-refundable
- Earned Income Tax Credit (EITC) – minimum age jumps back up from 19 to 25, and the maximum age limit (65) has been re-applied, with other considerations in the EITC adjusted for inflation
- Recovery Rebate Credit – since there will be no stimulus payments in 2022, taxpayers can’t claim any payments not received
- Charitable Gift Deductions – the above-the-line deductions for up to $300 in cash contributions ($600 for married filing jointly) expired, and only people who claimed a standard deduction are eligible for this
There are also several “tax extenders” that haven’t been extended yet. These are tax breaks that are often scheduled to expire, but they keep getting renewed, including
- deduction for mortgage insurance premiums
- nonbusiness energy property credits
- fuel cell motor vehicle credit
- alternative fuel vehicle refueling property credit
- two-wheeled plug-in electric vehicle credit
Increases in Tax Programs
There are also several increases to be seen in the 2023 tax season and tax year 2022.
The standard deduction has risen for all filing statuses (between $400 and $800 per status).
HSA (health savings account) contribution limits have increased by $50-100. FSA (flexible spending account) limits have risen by $100.
Estate tax exemption limits have risen by $360,000 and the gift tax limit has risen $1,000, to $16,000.
The capital gains income thresholds have increased, too.
These increases will probably continue as legislation passes to allow for adjustments due to inflation.
And overall, the income tax brackets for tax year 2022 are slightly wider, due to rising inflation rates.
Starting in the tax year 2022, all third-party settlement networks (PayPal, Venmo, Cashapp, etc.) will send you a Form 1099-K if you are paid over $600 during the year for goods and services (it does not apply to money you’ve sent or received from family and friends). This is a big change from the previous threshold when a 1099-K would only be sent if you received more than $20,000 in gross payments and you participated in more than 200 transactions.
This means millions more 1099-K forms will be sent out this year than in previous years. But eFile360 can help with all your 1099-K forms!
Organize Your Tax Forms Early
It seems like our taxes get more complex every year. And now that the craziness from the pandemic years has finally calmed down, it’s the perfect time to start getting your forms filed and organized as you move through the year, instead of trying to rush through them all at tax time.
eFile 360 is no-nonsense form filing, at a competitive price. And the more forms you file, the cheaper each form is. We offer three delivery options:
- E-file + Print & Mail
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- Print & Mail only
Looking to organize your business taxes for the 2022 tax year? Sign up for a free eFile360 account.