Whether major or minor, the tax code changes might lead to some surprises on what you’ve been expecting to owe. That’s why we’re outlining the updates that matter most. The more you know, the better you’ll be able to manage your tax obligation—and monitor your tax benefits throughout the year.
7 Changes for the 2022 Tax Code
A quick summary of seven key tax code changes for 2022 are listed below. If you’d like to discuss any of these updates further, please don’t hesitate to reach out to our team!
1. Child Tax Credit
Last year taxpayers were able to earn as much as $3,600 per child, but that’s getting rolled back to the 2020 tax year limits of $2,000 per child, so you’ll want to make note of those advance payments you may have received and adjust appropriately.
2. Dependent Care Credit
The qualified expenses have been lowered. We had a one-year expansion, but now that’s going away. For 2022, the maximum qualified childcare expenses are $3,000 for one child and then $6,000 for taxpayers with two or more dependents.
3. 100% Meal Deductibility
Typically business meals have only been 50% deductible. Going forward in 2022, however, qualified restaurant purchases will be 100% deductible. This is designed to help aid restaurants as they continue to recover from the pandemic shutdowns.
4. Digital Payment Reporting
Business owners that use third-party platforms and collect more than $600 in payments will need to watch out for the changes in those qualified digital payment reports for the IRS. You should expect to receive a 1099-K next January for any business-related activity on reseller platforms or systems like Venmo. This could lead to a more complicated tax return when you get ready to file.
5. Cryptocurrency Transactions
By 2023, we’ll be noticing an increase in the requirements for how agencies handle and track their cryptocurrency transactions. If that’s something you’ve been exploring, it might be a good idea to talk with your tax planner now to make sure your process is squared-away.
6. Mortgage Insurance Premiums
For the 2022 tax year, the deductibility for mortgage insurance premiums is going away. Unless we hear that this will be extended again, property owners should make plans to adjust their tax planning appropriately.
7. Itemized Deductions
Individuals and married couples will not be able to claim charitable deductions without an itemized tax return.
The 2022 Standard Deductions
Be sure to review the tax brackets and rates for the 2022 tax year, as well. On the bright side, the higher standard deductions are still in place:
· Single: $12,950 (up $400)
· Married Filing Joint: $25,900 (up $800)
· Head of Household: $19,400 (up $600)
· Married Filing Separate: $12,950 ( up $400)
The numbers here may seem straight-forward, but there’s still a lot that goes into making sure your tax responsibility is organized effectively and reasonably. At NSO & Company, we want that process to be as simple and stress-free as possible.
Get Clear, Year-Round Tax Planning with NSO!
While it certainly helps to have a general understanding of the 2022 tax code changes, it can be a real challenge to navigate how those updates will apply to your own earnings and deductions. Our team is here to help!
When you work with NSO & Company, you’ll have experience on your side with strategic tax planning. We partner with individuals, families, and business owners year-round to help you stay up-to-date. If you aren’t already on the calendar for a review, let’s get a consultation scheduled. Just send us a message or call our office at (317) 588-3131 to learn more!
