At TaxGlobal, we’re all about making taxes easier by giving you access to top professionals, resources, and connections. To that end, as you’re filing your taxes for 2022, we’ve compiled a list of the top 10 changes to be aware of that may affect how you file this year, as opposed to last year.
- Last year’s Child Tax Credit increase has expired
Last year, the Child Tax Credit (CTC) came with some enhancements, including advance monthly payments and increased credit. But if you were hoping to take advantage of this credit increase again, bad news: it has not been extended through 2022.
- Earned Income Credit has changed
Another credit you may not be able to take advantage of again this year is the Earned Income Tax Credit (EITC): available depending on your filing status, income level, and number of children. Working adults with no children may still be able to claim the credit, but the amount itself has changed, as has the age requirement for qualifying for it.
- Child and Dependent Care Credit has changed
Last year, the Child and Dependent Care Credit was refundable and had a maximum credit percentage of 50%. This year, that number is down to 35%, and it’s no longer refundable. You can still claim expenses up to $3000 for one child under 13, and $6000 for two or more children under 13.
- Recovery Rebate Credit is no longer available
Since no stimulus checks went out in 2022, the Recovery Rebate Credit will not be available for this year’s taxes.
- You may receive (and need to fill out) Form 1099-K
In the past, online sellers didn’t receive a 1099-K unless they’d made 200 transactions or more and a total of at least $20,000. This year, you only have to have made $600 in one or more transactions. That means that if you sold anything online (in places like eBay, Etsy, Venmo, PayPal, or even Facebook Marketplace), you’ll likely receive a 1099-K form.
But you may not be paying taxes on all of these transactions—only on the profits you made from them. So for example, if you bought a $200 item and sold it for $300, you’d report a $100 profit. Technically, these transactions have always been taxable: but people haven’t always reported them.
- Tax bracket income ranges have widened
While income tax rates themselves haven’t changed since 2021, income ranges have widened due to the inflation we experienced this year.
- Standard deduction has increased
Here’s some good news: the standard deduction, an automatic deduction available to all filers who don’t choose to use itemized deductions, has increased since 2021—so in other words, you can now deduct more from the amount you owe. The new deduction amounts are as follows:
- Married, filing jointly: $25,900 (increased by $800)
- Single or married, filing separately: $12,950 (increased by $400)
- Head-of-household filers: $19,400 (increased by $600)
- Contribution limits to HSAs and retirement accounts have increased
The limit for contributions to tax-advantaged accounts, such as health savings accounts (HSAs) and retirement plans, is another thing that has increased. People with a 401(k) can now contribute as much as $20,500 for 2022, which is $1000 more than last year. Meanwhile, those with an HSA can contribute $3650 for 2022, up from just $3600 last year. The annual contribution limit for a family plan is $7300, up from $6300 last year.
- The gift tax exclusion has increased
The gift tax exclusion, which specifies how much you can give away without it counting against your lifetime gift exemption, is now $16,000 for 2022.
- Puerto Rico residents can now claim the Additional Child Tax Credit
In the past, residents of Puerto Rico had to have three or more children in order to claim the Additional Child TAx Credit (ACTC). This year, you may qualify with one or more children.
Life is change, but being aware of all the things that have changed since you filed last year can help make paying your income tax less of a hassle in 2022. And if you need help, remember that TaxGlobal is home to hundreds of tax professionals who can help take the headache out of filing your taxes.