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Tax regulation changes to pay attention to:

Following the rapid-fire changes made in the middle of the 2020-2021 tax season, there haven’t been nearly as many regulation changes in 2022. However, with the upcoming seat changes in Congress, we expect a tax bill at the end of the year or beginning of next. Around this time, more agenda items will be pushed through, meaning that we expect more revisions by the end of 2022. That said, let’s take a look at what’s been passed so far and what we need to consider for this tax season.

New Additions

1) Energy Efficient Home Improvement Credits

A new bill has been passed for 2023 that allows you to receive a $1200 credit for certain qualified expenses every year (compared to the previous $500 given over a taxpayer’s lifetime). Click here to learn more. 

2) Electric Vehicle Tax Credits

For new EVs in service after December 31, 2022, Biden’s Inflation Reduction Act allows for up to $7500 in tax credit under certain qualifications. You can also get up to a $2500 tax credit for the purchase of a used EV. Click here to learn more.

3) IN $125 and $200 Automatic Taxpayer Refunds

The long-delayed rebate checks were sent out twice this year, once for up to $125 and another time, for up to $200. If you did not receive yours, you can claim the money on your 2022 tax return. Click here to learn more.

4) ERCs

“Eligible employers can claim the Employee Retention Credit, equal to 50% of up to $10,000 in qualified wages.” The IRS is still accepting amendments to receive ERCs. If you qualified in 2020 or 2021, you have two more years to apply. Click here to learn more.

5) $80 Billion for IRS including enforcement, audits

More than half of this money is meant for enforcement, with the IRS aiming to collect more from corporate and high-net-worth tax dodgers. Click here to learn more.

6) New Reporting Requirements for 1099-K

Anyone who sells more than $600 in merchandise with any number of transactions, even a single one, will be receiving the newly revised Form 1099-K. Click here to learn more.

7) IRS increases mileage rate for remainder of 2022

The mileage reimbursement rate for 2022 was 58.5 cents per mile. Starting July 1, 2022, the mileage rate was increased to 62.5 cents per mile. Click here to learn more.

 

Eliminations and Reductions

Some of the changes for 2022 also included eliminating deductions and reducing credits given during the pandemic.

8) Charitable Contributions

In 2020 and 2021, taxpayers who did not itemize charitable contributions were eligible for an additional $300 deduction if single and a $600 deduction if married. This was eliminated for 2022.

9) Daycare Expenses

In 2021, taxpayers could receive up to a 50% tax credit on the first $8,000 in daycare expenses. This was a significant tax credit for one year only. For 2022, this credit is reduced to 20 – 35% of $3000 spent on daycare expenses.

10) Child Tax Credits

In 2021, the child tax credit was increased to $3000 per child ages 6-17 and $3600 per child ages 0-5. For 2022, this was reduced to $2000 per child ages 0-16.

As the year comes to a close, it’s important to stay informed on tax regulation changes, as Congress uses the tax code to drive spending and saving habits, causing changes to occur more rapidly. Remember to keep checking in with our blog to stay up to date on these.

Click here to learn more about our tax planning and preparations services.
Or click here to contact us with any questions you have.

 

 

Blog by Kim Storen – Tax Services Manager

Learn more about Kim and the rest of the Storen Financial team here.