As a new filing season approaches there are always changes that are worth being reminded of. Below we will go into some of those changes that you may see affecting your 2022 tax return.
It’s time to say goodbye to many pandemic era increased tax credits. Many have reverted back to their pre-pandemic credit levels such as the Child Tax Credit, Earned Income Tax Credit, and the Child and Development Credit.
- For taxpayers with children under the age of 17 the Child Tax Credit was $3,600 per dependent for the 2021 return and is now $2,000 per dependent
- For eligible taxpayers with no children, they can receive a maximum of $560 from the Earned Income Tax Credit compared to roughly $1,500 on their 2021 filing. For taxpayers with one child, they can receive a maximum of $3,733 compared to $3,618. For taxpayers with two children, they can receive a maximum of $6,614 compared to $5,980. Finally, for taxpayers with three or more qualifying children they can receive a maximum of $6,935 compared to $6,728.
- The Child and Dependent Care Credit returns to a maximum of $2,100 in 2022 instead of $8,000 in 2021
Another item to note is the above the line $600 charitable contribution deduction for individuals who took the standard deduction is no longer available.
If you purchased a plug-in electric vehicle after August 16, 2022, you will want to take note of what came out of the Inflation Reduction Act of 2022. It amended the Qualified Plug-in Electric Drive Motor Vehicle Credit, aka the Clean Vehicle Credit. It now requires any new electric vehicle purchased after August 16, 2022, to have final assembly occurring in North America. The Department of Energy has put together a list of vehicles that MAY meet the final assembly requirements. Check you VIN number to see if your vehicle qualifies. There are some additional requirements below:
- Bought for your own use, not resale
- Used primarily in the US
- AGI may not exceed:
- $300,000 MFJ
- $225,000 Heads of households
- $150,000 all other filers
- You can use your modified AGI from the year you take delivery of the vehicle or the year before, whichever is less. If your AGI is below the threshold, you can take the credit
- The credit is nonrefundable, so you can’t get back more on the credit than you owe in taxes. You can’t apply any excess credit to future years
- MSRP of the vehicle cannot exceed
- $80,000 for vans, SUVs and pickup trucks
- $55,000 for all other vehicles
As you review your 2022 tax return do not be surprised about these changes and if you would like to talk to one of our professionals in our Tax Segment on this topic or any other business-related topic, please do not hesitate to contact us.