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 …
Continue Reading about Early Changes for the 2022 Tax Year →