Hey this is Scott and i have been a professional accountant for over 33 years. i have seen the crazy things and arbitrary decisions made by our government, so I wanted to keep you up to date on what to expect.
Tax Casualties for 2022
Lets start with the child tax credit. Prior to 2022 if you had a child under 18 you could receive some monthly tax payments
Children under 6 received a deposit of $300 a month, and $250 for children under 17. Those amounts go down to $2000 per child for children under 17 of which only $1500 is refundable.
Charitable donations of cash are no more. Non itemizers can no longer write off up to $300 dollars in charitable donations.
If you can itemize the 60% AGI limit on charitable gifts is reinstituted. That limit for corporations drops to a dismal 10%. Although charities are pressing Congress for substantive change, they do not seem to be in any hurry to act.
Other casualties include energy efficient doors and windows as well. Also itemize deductions for mortgage insurance premiums have hit the chopping floor as well.
Tax Survivors for 2022
Although l-t capital gain rates and qualified dividend rates have not changed the 0% bracket and 15% bracket threseholds have increased. You will now pay a 0% rate if as an individual your income is less than $41675 or $83350 for joint returns.
Kiddie tax reduces for children under 19 or under 24 and fulltime student. Good news is the first $1150 of unearned income
is tax free whereas the next $1150 is tax at the children’s rate. Any excess beyond that is taxed at parent’s rates.
Tax Savings for 2022
Maximum 401k contribution limit for under 50’s is $20500 or over 50’s $27000. The same rules apply to 403bs and 457 plans. caps for IRAs remain at $6000 for under 50’s and an addition $1000 for those over 50. Roth IRAs phase out $204,000 to $214,000 for couples and $129,000 to $144,000 for singles.
New life expectancy tables have come out letting you take your RMDs out over a longer period of time. Letting you grow your accounts a bit longer.
Standard Mileage rate write offs are $0.585 per mile for business, $0.18 for medical, but charitable mileage remains a paltry $0.14 per mile.
Good news is business meals are currently 100% deductible. Entertainment remains non deductible.
Whether you like the tax law changes or dislike them, I am sure you could use a raise since the average raise in the US is less than 3%.
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