Jenny Dickerson - Edmond Life and Leisure
Feb 14, 2023
After another year of tax law changes, we have now seen a lot of changes to the Form 1040 (individual) tax return for 2022. There are some import changes outlined below that will impact many households.
After another year of tax law changes, we have now seen a lot of changes to the Form 1040 (individual) tax return for 2022. There are some import changes outlined below that will impact many households. The filing deadline for the 2022 tax return is April 18, 2023, you must either file your return or extend your return by this deadline.
The standard deduction has increased for all filers, $12,950 for single and married filing separately, $25,900 for married filing jointly, and $19,400 for head of household. There has also been a change in a filing name, qualifying widow(er) is now called qualify-ing surviving spouse.
Charity Deductions
For 2021 there was an above the line deduction of up to $300 (or
$600 for married filing jointly) for charitable donations, even if you take the standard deduction. This is gone for 2022.
Student Loan forgiveness
Under the Student Debt relief plan, student debt forgiveness by the U.S. Department of Education is not a tax-able event. The Student Debt relief plan can give up to $20,000 in debt cancellation to eligible Pell-grants and up to $10,000 in debt cancellation for eligible non-Pell Grant recipients.
Child Tax Credit
The biggest change on the individual tax return is the Child Tax Credit (CTC). Previously the credit was fully refundable and children ages up to 17 years old qualified, and half of the credit was paid in advance through monthly payments. For 2022 the credit is nonrefundable, the credit amount also drops back down to
$2,000 per qualifying child, and the new age limit for children to qualify is 16 years old. This is different from the Other Dependent Credit (ODC), and the Additional Child Tax Credit (ACTC)
Child and Dependent Care Credit
The child and dependent care tax credit is also back to being nonrefundable. The maximum credit percentage drops to 35% of your employment related expenses and the limit of childcare expenses is lowered to $3,000 for one child and $6,000 for two or more children, previously $8,000 for one child and $16,000 for more than two or more children.
Earned Income Tax Credit The earned income credit also has some big changes this year. If you don’t have qualifying children, the age restriction returns with a mini-mum age of 25 and limit of 65 years old. If you are married filing jointly, one spouse must meet the age requirement to qualify. The maximum credit for single workers with no children drops to $560. The maximum credit for workers with children has increased to an inflation adjusted
$6,935, and the phase-out ranges have also been adjusted for inflation.
Jenny Dickerson is a tax associate at Arledge, the largest locally owned accounting firm in the Oklahoma City metropolitan area. Arledge is a recognized leader in the accounting industry offering practical solutions in the areas of tax planning, auditing, consulting, accounting advisory services and client accounting.
This article contains general information only and does not constitute tax advice or any other professional services. Before making any decisions or taking any action that might affect your income taxes, you should consult a professional tax advisor. This article is not intended for and cannot be used to avoid future penalties that may be imposed by the Internal Revenue Service.