The Internal Revenue Service announces changes to the tax code each year and here are some changes that will affect this year’s tax obligations:
Child Tax Credit Reduction:
The child tax credit was set at $3600 per child in 2021, but has been reduced to $2000 per child in 2022.
A $300 charitable deduction ($600 for married couples) was allowed without itemizing in 2021. This has been eliminated for 2022 and charitable deductions are allowed only if you can itemize.
Dependent Care Credit Changes:
Dependent care credits were increased in 2021 for one year to up to $8,000 for 1 child and $16,000 for 2 or more eligible dependents. This has been reduced in 2022 to $3000 for 1 child and $6000 for 2 or more children.
The IRS will now be requiring digital applications like Venmo, Zelle, and Ebay to name a few to issue 1099-K forms if more than $600 in payments were received (if determined to be business related). The amounts will need to be reported on individual tax forms.
Mortgage Insurance Premiums:
These payments will no longer be deductible in 2022.
As always, 89tax.com is here to help interpret these changes and to apply them to our customers tax forms in accordance to the latest tax laws.