Important Tax Changes in 2022
We are a little over halfway through 2022 and now is the perfect time to brush up on a few of the newest tax changes coming in 2022.
Here is an overview of some of the biggest tax changes to look out for in the year ahead:
2022 Tax Rates and Brackets
The IRS has announced changes across the board for tax rates and brackets. Here is an overview:
- 37% for individual single taxpayers with incomes over $539,900 ($647,850 for married couples filing jointly)
- 35% for individual single taxpayers with incomes over $215,950 ($431,900 for married couples filing jointly)
- 32% for individual single taxpayers with incomes over $170,050 ($340,100 for married couples filing jointly)
- 24% for individual single taxpayers with incomes over $89,075 ($178,150 for married couples filing jointly)
- 22% for individual single taxpayers with incomes over $41,775 ($83,550 for married couples filing jointly)
- 12% for individual single taxpayers with incomes over $10,275 ($20,550 for married couples filing jointly)
- 10% for individual single taxpayers with incomes of $10,275 or less ($20,550 for married couples filing jointly)
You’ll also see an increase in your standard deduction for the 2022 tax year.
- For single and married filers filing separately, your standard deductions will increase to $12,950.
- If you’re married and plan to file jointly, the deduction will sit at $25,900.
- For heads of households, the standard deduction will sit at $19,400.
Capital Gains Tax
When you sell assets and make a profit on those assets you have to pay capital gains tax. For the 2022 tax year, short-term gains will be taxed as ordinary income (no change there) while long-term gains are taxed at either 0%, 15% or 20% depending on filing status and taxable income.
Check out this resource for more details about capital gains a graph with long-term capital gains tax rates.
Earned Income Credit (EITC)
For 2022, the maximum credit for three or more children is $6,935. If you’re a married couple filing jointly the phase-out for the credit starts at $26,260 of adjusted gross income. You’ll complete the credit when you hit a total of $59,187.
Child Tax Credit
In 2022 the advanced payment and extended child tax credit will end. However, you’ll still see the effects of the advanced payments from 2021, in 2022.
You’ll need to compare the advanced payments you received with the amount of child tax credit you can properly claim on your 2021 return. If you received less than what you are eligible for, you can claim the rest on your 2021 tax return. If you received more, you may need to repay some or all of the excess.
Third-Party Settlement Organizations Reporting
The government is tightening its reporting requirements for third-party settlement organizations. You’ll now be required to report transactions that exceed $600 (eliminating the 200-transaction threshold). This is only for transactions that involve goods and services.
For example, if you’re a business owner who allows customers to pay with third-party settlement organizations and you receive more than $600 in total during the course of the year (regardless of the number of transactions), you are required to report it to the IRS.
Reach Out to U-nique Accounting for Tax Help in 2022
It’s important to stay up-to-date on the tax changes coming in 2022. They can greatly affect the way you manage your taxes and your overall tax obligation. While this list is helpful, it’s not all-inclusive.
If you’re worried you’ll miss a change on your own, contact U-nique Accounting today!
We stay up-to-date on all of the latest tax changes so we can help our clients file their taxes with confidence.