Tax News

What’s New for 2022

A Few Tax Changes and Key Amounts for the 2022 Tax Year

The American Rescue Plan, which was enacted in March 2021, provided a dramatic, one-year expansion of the child tax credit for the 2021 tax year. It was not extended for 2022 and the credit goes back to $2000, under age 17 and may be only partly refundable.
The American Rescue Plan also made significant improvements to the child and dependent care credit. But, again, the changes only apply to the 2021 tax year. The credit is now $3000 and is nonrefundable.

Although the tax rates didn’t change, the income tax brackets for 2022 are slightly wider than for 2021. The difference is due to inflation during the 12-month period from September 2020 to August 2021, which is used to figure the adjustments.

There is no credit for 2022.
Anyone who is at least 72 years old by the end the year is required to take an RMD for 2022. There are other changes also. The RMD rates have been updated and may be smaller for 2022.

The enhancements that were made for 2021 Earned Income Tax Credits were not extended for 2022. The minimum age jumps back to 25 and the maximum back to 65. Other changes also apply.

Tax rates on long-term capital gains (i.e., gains from the sale of capital assets held for at least one year) and qualified dividends did not change for 2022. However, the income thresholds to qualify for the various rates were adjusted for inflation. Maximum tax rate is 20%.

The 2022 standard mileage rate for business driving increased to $.58.5 per mile. The mileage allowance for medical travel and military moves Changed to 18 cents a mile in 2022. However, the charitable driving rate stayed put at 14¢ a mile — it’s fixed by law.
The above the line deduction of $300, $600 for married has expired. Charitable now must be claimed as a standard deduction.

These are just a few of the changes to Tax Returns for 2022. If you need more information, please call, or email me.

Bob Snyder