Happy New Year 2023

 Happy New Year!  We hope your holidays were festive and joyous!  We are ready for the new tax season that is already upon us!  

Get your tax documents together and get ready to file taxes in the coming weeks.  Remember, you may not receive your W2 or other tax documents until the end of January, which is when employers and other reporting agents are required to provide you with your tax documents.  Some brokerage account 1099-Bs may not be mailed until February - March 2023, depending on the firm. It is best practice to wait until all of your documents arrive in order to avoid having to file an amendment.

What’s New for 2022

Tax Brackets and Rates

The income tax brackets are increasing to approximately 3.9%, due to inflation.  The 2022 tax brackets are shown in the diagram below.

Key Tax Code Changes:

·      Increased teacher deduction.  The deduction for classroom supplies has increased to $300.

·      Child tax credit rollback.  The advance child tax credit now disappears, and the current credit rolls back to $2,000 per child.

·      Dependent care credit rollback.  The maximum qualified childcare expense for 2022 has been reduced to $3,000 for one child and $6,000 for two or more children. 

·      100% meal deductibility.  Previously, businesses could only deduct 50% of their meal expenses.  To help restaurants recover from the pandemic, businesses may now deduct 100% of meal expenses.

·      Reporting digital payments.  If you receive more than $600 in digital payments for your business, you may be issued a Form 1099-K in January.  This includes Venmo and digital ticket resellers.

·      Virtual currency tracking.  Brokers are required by the IRS to report cryptocurrency transactions beginning in 2023.  Many firms are implementing the new reporting requirements in 2022.

·      Mortgage insurance premiums.  Mortgage insurance premiums are no longer deductible in 2022.  The 2017 Tax Cuts and Jobs Act eliminated this deduction, but Congress later reinstated it.  It expired in December 2021.

·      Charitable giving deduction.  The deduction for charitable giving for taxpayers who do not itemize on their return is no longer available in 2022.  Congress created a temporary deduction through 2021 for charitable giving.

Charitable contributions may be deducted on your tax return if you itemize deductions, and all qualified deductions exceed $12,950 for single filers and $25,900 for married filers.

 

Schedule your tax appointment soon! Call or email for an appointment.  We look forward to seeing you soon!