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By the Numbers: Tax Changes from the IRS for 2022 Filers

By the Numbers: Tax Changes from the IRS for 2022 Filers

March 02, 2023

For the 2022 filing season, there are a few updates from the Internal Revenue Service (IRS) that all taxpayers should be aware of. As tax professionals, we track changes from the IRS and keep them top of mind, not just during tax season, but all year round.

Prepare for this year’s tax season by reviewing these new changes – and work with a knowledgeable tax advisor to understand how they might impact you.

Certain tax credits will return to 2019 levels. This means that affected taxpayers may receive a significantly smaller refund compared with the previous tax year. Changes include amounts for the Child Tax Credit (CTC), Earned Income Tax Credit (EITC), and Child and Dependent Care Credit.

  • If eligible, those who got $3,600 per dependent in 2021 for the CTC will get $2,000 for the 2022 tax year.
  • For the EITC, eligible taxpayers with no children who received roughly $1,500 in 2021 will now get $500 for the 2022 tax year.
  • The Child and Dependent Care Credit return to a maximum of $2,100 in 2022 instead of the $8,000 maximum in 2021.

New standard deductions. The standard deduction for married couples filing jointly for tax year 2022 rises to $25,900 up $800 from the prior year. For single taxpayers and married individuals filing separately, the standard deduction rises to $12,950 for 2022, up $400, and for heads of households, the standard deduction will be $19,400 for tax year 2022, up $600. 

Energy credits. The 2022 Inflation Reduction Act (IRA) contains several energy credits. Solar panels, wind turbines, heat pumps, insulation, and energy efficient doors and windows are some of the eligible energy credit purchase items.

No above-the-line charitable deductions. During COVID-19, taxpayers could take up to a $600 charitable donation tax deduction on their tax returns. However, in 2022, those who take a standard deduction may not take an above-the-line deduction for charitable donations.

Premium Tax Credit. For the tax year 2022, taxpayers may still qualify for temporarily expanded eligibility for the premium tax credit.

Eligibility rules have shifted to claim a tax credit for clean vehicles. The Inflation Reduction Act of 2022 changed the qualifications for a Clean Vehicle Credit.

Crypto currency. The Infrastructure Investment and Jobs Act, a bipartisan bill passed in late 2021, made changes to reporting requirements for digital assets, including cryptocurrencies. Congress and the IRS have both become aggressively involved in monitoring the activities and the failure to correctly report crypto transactions. One penalty for failure to report crypto activities can be 50% of the highest balance in the account each year.

2022 mileage rates. The IRS has changed the standard mileage rates for this tax filing year. From January 1st to June 30 the standard mileage rate is $0.585 and changes to $0.625 for July 1 through December 31. Medical and moving mileage changes from $0.18 to $0.22, respectively. Charitable mileage remains unchanged at $0.14 for 2022.

Get organized. Aim to develop a recordkeeping system − electronic or paper − that keeps your important information in one place. This includes year-end income documents like Forms W-2 from employers, Forms 1099 from banks or other payers, Form 1099-K from third-party payment networks, Form 1099-NEC for nonemployee compensation, Form 1099-MISC for miscellaneous income as well as records documenting all digital asset transactions, think cryptocurrencies. Ensuring your tax records are organized and complete before filing will help you avoid errors and unnecessary delays.

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