Tax Changes for the 2022 Filing Season

Scott M. Kogler, CPA/PFS

Here’s what you should know before filing your taxes

Tax season is well underway, and there are a few tax changes from the Internal Revenue Service (IRS) for 2022 filings that all taxpayers should be aware of.

Prepare for this year’s taxes by reviewing these new updates:

Certain tax credits will return to 2019 levels. This means that affected taxpayers may receive a significantly smaller refund compared with the previous tax year. Changes include amounts for the Child Tax Credit (CTC), Earned Income Tax Credit (EITC), and Child and Dependent Care Credit.

• If eligible, those who got $3,600 per dependent in 2021 for the CTC will get $2,000 for the 2022 tax year.
• For the EITC, eligible taxpayers with no children who received roughly $1,500 in 2021 will now get $500 for the 2022 tax year.
• The Child and Dependent Care Credit return to a maximum of $2,100 in 2022 instead of the $8,000 maximum in 2021.

New standard deductions. The standard deduction for married couples filing jointly for tax year 2022 rises to $25,900 up $800 from the prior year. For single taxpayers and married individuals filing separately, the standard deduction rises to $12,950 for 2022, up $400, and for heads of households, the standard deduction will be $19,400 for tax year 2022, up $600.

Energy credits. The 2022 Inflation Reduction Act (IRA) contains several energy credits. Solar panels, wind turbines, heat pumps, insulation, and energy efficient doors and windows are some of the eligible energy credit purchase items.

No above-the-line charitable deductions. During COVID-19, taxpayers could take up to a $600 charitable donation tax deduction on their tax returns. However, in 2022, those who take a standard deduction may not take an above-the-line deduction for charitable donations.

Premium Tax Credit. For the tax year 2022, taxpayers may still qualify for temporarily expanded eligibility for the premium tax credit.

Eligibility rules have shifted to claim a tax credit for clean vehicles. The Inflation Reduction Act of 2022 changed the qualifications for a Clean Vehicle Credit.

HOW TO PREPARE

Start now. Some tax preparation delays are not in your control, but the most common reasons for last-minute preparation and filing are simply procrastination and disorganized or incomplete business records. If you haven’t started already, it’s time. Gather your documents now and commit to more systematic record-keeping going forward.

Use the tax organizer. Davie Kaplan’s tax organizer is intended to help you remember and account for all required documents. Missing documents will be identified as “open.” If you can’t upload your documents, send them via FedEx or UPS; regular USPS mail service continues to experience delays. We recommend you authorize electronic delivery of final returns and authorization forms via our client portal; it’s quick, secure and dependable.

Use an online bookkeeping program. If you don’t already use Quickbooks or another reliable, user-friendly bookkeeping application, commit to implementing one. If you need assistance, Davie Kaplan has several excellent Quickbooks Pro advisors who can guide your initial setup and training, or even provide ongoing bookkeeping support if needed.

Understanding and following tax changes each year is a big task – and one that our team of experts focuses on all year, not just during tax season. Stay informed, organized, and in regular communication with your tax advisor to make the most of your possibilities. Davie Kaplan tax advisors are available to help you prepare, with forward-looking tax advice to keep you and your business thriving.