By Bill Conlan
Ed. Note – In the coming weeks, city residents will begin the winter chore of preparing their taxes for 2022. As with any other year, changes in the tax code were made that taxpayers should be aware of when doing the forms. Local tax preparer Bill Conlan has written this compendium of changes.
The New Year has begun, and the annual rituals begin anew. Once again it is time to begin thinking about filing your income taxes for the year 2022, and I want to give you a summary of any new changes for the year.
The first thing to make note of is that many of the expanded credits and deductions available for the 2020 and 2021 tax years, due to the Covid-19 pandemic, have for the 2022 filing season, been reduced or eliminated.
The child tax credit reverts to pre-Covid limits. That is, $2,000 for a qualifying child under 17, and $500 for all other dependents. The extra amounts allowed in 2021 up to $3,600 for children under 6, and $3,000 for all others is now eliminated. You qualify for original amounts if your Modified Adjusted Gross Iincome (MAGI) is below $200,000 for single filers and below $400,000 for married taxpayers.
The dependent care credit is also reduced to pre-2021 amounts of $3,000 for one child, down from the $8,000 allowance for the 2021 year.
The enhanced Earned Income Credit (EIC) available for year 2021 is now eliminated, and taxpayers must now be between ages 25-64 to take advantage of any EIC.
The $300 and $600 charitable deduction for non-itemizers is eliminated.
Residential energy credits are available for the 2022 tax filing year, and include insulation, storm windows, furnaces, heaters, boilers, and central air conditioners.
The standard deduction is now $25,900 for married persons and $19,400 for Heads of Household, and $12,950 for single filers.
The IRS has delayed for one year implementing the new K-1 reporting requirement for Venmo, Pay Pal, etc, which changed amounts from $20,000 to $600. It is unclear if some taxpayers might still receive some forms this year for 2022 taxes.
The educator deduction of $300 per individual is allowed for 2022 taxes.
There have been changes in the Connecticut Tax Code as well for the 2022 tax season. For CT taxes, the Pension and Annuity Exemption has been increased to 100% of taxable income for filers, if Adjusted Gross Income (AGI) is below $75,000 for single and head of household filers, and $100,000 for married filing jointly. For Teachers they may deduct 50% of their taxable pension income for year 2022, and the deduction for Military Retirement Pay is allowed for any payments included in Federal Gross Income
As of this date, proposals to reinstate last year’s child tax credit amounts, and increase the (SALT) deduction from the present $10,000 to $80,000, have not been passed.
Hopefully, this important information is helpful, and please feel free to give me a call if I can be of any assistance.