I. Introduction

As the new year starts, taxpayers are gearing up to file their tax returns for the 2022 fiscal year. This blog post aims to provide an overview of the changes to the 2022 tax return, along with the due date for filing the return.

Changes and updates to the 2022 tax return
Changes and updates to the 2022 tax return

II. Changes to the 2022 Tax Return

A. Higher Standard Deduction

For the 2022 fiscal year, the standard deduction has increased for all filing statuses. Single filers can now claim a deduction of $12,950, while married couples filing jointly can claim a deduction of $25,900.

B. Increased Income Tax Brackets

The income tax brackets have also been adjusted for the 2022 fiscal year to account for inflation. Taxpayers will now pay a lower percentage of their income in taxes, with the top marginal rate set at 37%.

C. Changes to Retirement Account Contributions

The contribution limits for retirement accounts have been increased for the 2022 fiscal year. The annual contribution limit for 401(k), 403(b), and most 457 plans has increased to $20,500. The annual contribution limit for traditional and Roth IRAs has also increased to $6,000.

D. Child Tax Credit Changes

The credit amount of the CTC is $2,000 for each qualifying child. The amount of CTC that can be claimed as a refundable credit is limited as it was in 2020, except the maximum additional child tax credit amount (ACTC) has increased to $1,500 for each qualifying child. A child must be under age 17 at the end of 2022 to be a qualifying child. Bona fide residents of Puerto Rico are no longer required to have three or more qualifying children to be eligible to claim the ACTC. Bona fide residents of Puerto Rico may be eligible to claim the ACTC if they have one or more qualifying children.

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E. Explanation of changes to the alternative minimum tax (AMT) exemption

Alternative minimum tax (AMT) exemption amount increased. The AMT exemption amount is increased to $75,900 ($118,100 if married filing jointly or qualifying surviving spouse; $59,050 if married filing separately). The income levels at which the AMT exemption begins to phase out have increased to $539,900 ($1,079,800 if married filing jointly or qualifying surviving spouse).

F. New Line in Form 1040 and 1040-SR

New lines 1a through 1z on Form 1040 and 1040-SR. This year, line 1 is expanded and there are new lines 1a through 1z. Some amounts that in prior years were reported on Form 1040, and some amounts reported on Form 1040-SR are now reported on Schedule 1.Scholarships and fellowship grants are now reported on Schedule 1, line 8r. Pension or annuity from a nonqualified deferred compensation plan or a nongovernmental section 457 plan are now reported on Schedule 1, line 8t.

Wages earned while incarcerated are now reported on Schedule 1, line 8u. New line 6c on Form 1040 and 1040-SR. A checkbox was added on line 6c. Taxpayers who elect to use the lump-sum election method for their benefits will check this box.

G. Certain Deductions Not available.

Credits for sick and family leave for certain self-employed individuals are not available. The credit for sick and family leave for certain self-employed individuals were not extended and you can no longer claim these credits. Health coverage tax credit is not available. The health coverage tax credit was not extended. The credit is not available after 2021.

H. Child Care Credit

For 2022, the credit for the child and dependent care expenses is nonrefundable. The dollar limit on qualifying expenses is $3,000 for one qualifying person and $6,000 for two or more qualifying persons. The maximum credit amount allowed is 35% of your employment-related expenses.

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I. Modified AGI limit for traditional IRA contributions.

For 2022, if you are covered by a retirement plan at work, your deduction for contributions to a traditional IRA is reduced (phased out) if your modified AGI is: More than $109,000 but less than $129,000 for a married couple filing a joint return or a qualifying surviving spouse, More than $68,000 but less than $78,000 for a single individual or head of household, or Less than $10,000 for a married individual filing a separate return.

If you either live with your spouse or file a joint return, and your spouse is covered by a retirement plan at work but you aren’t, your deduction is phased out if your modified AGI is more than $204,000 but less than $214,000. If your modified AGI is $214,000 or more, you can’t take a deduction for contributions to a traditional IRA

J. Adoption credit.

The adoption credit and the exclusion for employer-provided adoption benefits have both increased to $15,950 per eligible child in 2022. The amount begins to phase out if you have modified AGI in excess of $239,230 and is completely phased out if your modified AGI is $279,230 or more.

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III. Due Date for Filing the 2022 Tax Return

The due date for filing the 2022 tax return is April 18, 2023. Taxpayers who need more time to file can request an extension, which will give them until October 17, 2023, to file their return. However, it’s important to note that any taxes owed must still be paid by the original due date of April 18, 2023.

IV. Conclusion

In conclusion, the 2022 tax return brings several changes that taxpayers need to be aware of. These changes include higher standard deductions, increased income tax brackets, changes to retirement account contributions, and an expanded child tax credit. It’s important to file your tax return on time to avoid penalties and interest, and to make sure you take advantage of all the deductions and credits available to you.

Source: IRS official website

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