News and Tax Rates
There are 6 major changes for the 2022 filing year:
1. Standard deductions are larger
A standard deduction is a specific amount that you can subtract from your income, and it's adjusted each year for inflation. How much you get is based on a few factors: your filing status, your age, and if someone else can claim you as a dependent. Details are below.
2. Income tax brackets shift
Tax brackets have gone up for 2022, but the tax rates stay the same. (see bracket below)
3. The child tax credit is smaller
With most of the pandemic relief programs now behind us, some tax credits, including the child tax credit (CTC), will shrink for many families.
For the CTC, the credit amount will drop to a maximum of $2,000 per dependent under age 17 for 2022, down from $3,600 for children under age six or $3,000 for children under age 18 in 2021.
4. Income thresholds drop for the child and dependent care credit
Another tax credit change to note is that the temporary expansion of the child and dependent care credit expired. This credit helps parents who pay out of pocket for childcare expenses that enable them to work to claim a credit that's equal to 20% to 35% of those total expenses. Taxpayers with higher incomes can claim the smaller credit.
5. Earned income tax credit reduced for childless taxpayers
The earned income tax credit (EITC) was temporarily expanded in 2021 to help moderate and low-income workers without children get a bigger tax break, but that relief has ended.
6. No more $300 charitable deduction
So what does all this mean for your tax return?
In general, these changes "mean more people will wind up owing or getting a smaller refund than they did the past couple years."
That's because the size of several tax credits and deductions, and the eligibility requirements, have gone back to pre-2021 levels, primarily targeting moderate- and low-income workers rather than large swaths of the US population.
Tax Scams/Consumer Alerts
If it sounds too good to be true, it probably is!
In recent years, thousands of people have lost millions of dollars and their personal information to tax scams and fake IRS
REMEMBER: The IRS doesn't initiate contact with taxpayers by phone calls, email, text messages or social media channels to
request personal or financial information. In addition, IRS does not threaten taxpayers with lawsuits, imprisonment or other
enforcement action. Being able to recognize these tell-tale signs of a phishing or tax scam could save you from becoming a victim.
THINK BEFORE YOU DONATE:
Here are the 'good guys' or, even better, choose to donate to a local nonprofit.
The American Legion National Commander receives a $0.00 salary
The Veterans of Foreign Wars National Commander receives a $0.00 salary
The Disabled American Veterans National Commander receives a $0.00 salary
The Military Order of Purple Hearts National Commander receives a $0.00 salary
These organizations with no salaries have donations going to help Veterans and their families.
& Federal Tax Rates
For the 2022 tax year, the standard deduction is:
$12,950 for single/married filing separately,
$25,900 for joint filers
$19,400 for head of household