2023 FILING SEASON CHANGES FOR 2022 TAX RETURNS
2023 FILING SEASON CHANGES FOR 2022 TAX RETURNS
DUE DATE FOR 2022 RETURNS!
The due date to file your 2022 income tax return or extension form is April 18, 2023.
Increased Standard Deduction
For the 2023 tax season, the standard deduction amounts will be increased slightly as in previous years. The new amounts for 2022 tax returns are below. The increased standard deduction will continue to allow more individuals to file without itemizing deductions on Schedule A.
FILING STATUS STANDARD DEDUCTION AMOUNT
Married Filing Joint;
Qualified Widower $25,900
Single; Married Filing Separate $12,950
Head of Household $19,400
Personal Exemption
The personal exemption for the tax year 2022 remains at 0, as it was for 2020; this elimination of the personal exemption was a provision in the Tax Cuts and Jobs Act.
Tax Rates
For the tax year 2022, the tax rate remains at 37%. All other rates are below based on taxable income levels.
Tax Rate Single Taxable Income
37% $539,900 and higher
35% Over $215,950
32% Over $170,050
24% Over $89,075
22% Over $41,775
12% Over $10,275
10% Less than $10,275
MFJ Taxable Income
37% Over $647,850 and higher
35% Over $431,900
32% Over $340,100
24% Over $178,150
22% Over $83,550
12% Over $20,550
10% Less than $20,550
Tax Rate HOH Taxable Income
37% $539,900 and higher
35% Over $215,950
32% Over $170,050
24% Over $89,050
22% Over $55,900
12% Over $14,650
10% Less than $14,650
Itemized Deduction Limits
There is no limitation on itemized deductions for 2022 tax returns (just as in 2018-2021). The Tax Cuts and Jobs Act eliminated the rule.
AMT Exemption
The Alternative Minimum Tax exemption for 2022 is $75,900. The exemption begins to phase out at an AGI over $539,900 for single taxpayers. The exemption for MFJ taxpayers is $118,100 and begins to phase out with an AGI over $1,079,800.
HSA Contribution Limits
The HSA contribution limit for 2022 has increased to $3,650 for single coverage and $7,300 for family coverage.
Child Tax Credit
The enhanced credit allowed for qualifying children under age six and children under age 18 has expired. For 2022, the initial amount of the CTC is $2,000 for each qualifying child. The credit amount begins to phase out where the modified adjusted gross income exceeds $200,000 ($400,000 in case of a joint return). The amount of the CTC that can be claimed as a refundable credit is limited as it was in 2020, except that the maximum ACTC amount for each qualifying child increased to $1,500.
The increased age allowance for a qualifying child has expired. A child must be under the age of 17 at the end of 2022 to be a qualifying child.
ACTC and bona fide residents of Puerto Rico. Bona fide residents of Puerto Rico may be eligible to claim the ACTC if they have one or more qualifying children—advance child tax credit payments. Bona fide residents of Puerto Rico are no longer required to have three or more qualifying children to be eligible to claim the ACTC. Advance child tax credit payments have yet to be issued for 2022.
Child & Dependent Care Tax Credit
For 2022, the child and dependent care credit are non-refundable. The maximum credit percentage also drops from 50% to 35%. Fewer care expenses are eligible for the credit, too. For 2022, the credit is only allowed for up to $3,000 in costs for one child/dependent and $6,000 for more than one.
Clean Vehicle Credit
Under the new law, people still may be eligible for a tax credit of up to $7,500 for purchasing a new electric vehicle under the renamed Clean Vehicle Credit, and for the first time, starting January 1, 2023, people buying used electric cars may be eligible for a tax credit up to the lesser of $4,000 or 30% of the sales price, depending on their income. Since credits are a dollar-for-dollar reduction of taxes you owe, you can lower your taxes by up to $7,500. After August 16, 2022, the final assembly of the eligible automobile must be in North America.
No Recovery Rebate Credit
There were no stimulus payments in 2022. Therefore, there will not be a recovery rebate credit to claim for stimulus payments not received.
No Charitable Deduction For Non-Itemizers
Unless the deduction is extended later in the year, the only way to claim charitable deductions will be through Schedule A.
Earned Income Tax Credit (EITC)
Age Limits Restored To EIC - The EIC qualifications will return to pre-2021 tax return rules. Therefore, taxpayers who qualified in 2021 that were 65 or older will not be eligible for the EIC in 2022, pending further legislation. Also excluded will be taxpayers aged 19-24 with earned income. The election to use 2019 earned income has also been eliminated. The investment income limitation is also increased from $10,000 to $10,300 and will be adjusted by inflation for years after 2022.
EIC For Taxpayers With Zero Qualifying Children - The credit was expanded in 2022 for taxpayers with zero qualifying children. Those taxpayers will still qualify but for a much lower amount. The maximum for 2022 will be $560 with zero qualifying children.
Educator Expenses/Deduction
For 2022, the deduction teachers can claim for expenses paid out of pocket increases to $300.
Unemployment Exclusion
The $10,200 exclusion for unemployment income was only for 2020 (pending further legislation). Therefore, the unemployment benefits received in 2022 will be taxable on your federal income tax return.
Charitable Contributions
The $300 above-the-line deduction for cash contributions was initially set to expire after 2020 returns. However, the deduction has been extended to 2022 returns with one important update. Previously, the deduction was capped at $300 per return; for 2022, the deduction will be limited to $300 per taxpayer. This means MFJ returns will have the ability to claim a $600 deduction for cash contributions.
The 60% AGI limitation for charitable contributions has also been suspended for 2022.
Forgiven Student Loan Debt
Starting in 2022, most student loan debt incurred for post-secondary education that is forgiven will not be considered taxable income. The rule allowing workers to exclude up to $5,250 of college loans paid by their employer in 2020 from taxable wages was also extended through 2025. The $5,250 cap applies to student loan repayment benefits and other educational assistance an employer offers.
Gift Tax Exclusion
The lifetime estate and gift tax exemption increased to $11.7 million for 2022 ($23.4 million for couples if a portability election is timely made). The gift tax exclusion remains $15,000 per recipient for 2022. This means you can give up to $15,000 ($30,0