Before you file your 2022 tax return this year and are alarmed at the difference in your tax refund (or the fact that you owe money), check out these significant tax changes to how you will be filing this year. If you have any questions before you file your taxes with us here at NTRC Tax & Finance in Stone Mountain, please reach out to our team of tax experts.
2022 Tax Changes That Will Impact You, Stone Mountain
Here at NTRC Tax & Finance, we always try to get you the best refund possible (or try to minimize your tax burden). The tax season for 2022 is going to be a little bit different than last year. We’re seeing some credits being reduced, new forms impacting clients who used online payment platforms for “for-profit” transactions, and your charitable deductions may be more difficult to claim this year. Let’s take a look.
Some Tax Credits Will Be Reduced on Your Tax Return
For your 2022 tax return, the child and dependent care tax credit and the child tax credit have been reduced. If you recall, these credits were temporarily increased due to financial hardship during the pandemic. Now that these credits have returned to lower rates, you’ll notice that your tax refund (or tax burden) will be directly affected.
And it’s not insignificant – families will see a reduction of $1,000 to $1,600 per child. If you’re a parent and you’re wondering why your return is so much lower, this is most likely the culprit
If you used childcare during 2022 to help you during the day, you’ll also see that the caps for the care credit reduced by $5,000 to $10,000, depending on how many children you have.
1099-K Forms Are Now a Thing for Lower Thresholds
What’s a 1099-K form? If you’ve seen this pop up in your Venmo or PayPal account recently, you might be wondering what it is and why you’ve received it when you never did before.
Well, it’s most likely because you used one of these platforms to do “business” transactions (where you turned a profit) that exceeded $600 – which isn’t a difficult number to hit. Prior to the 2022 tax season, the threshold for this form was a whopping $20,000 and 200 transactions.
Now, personal transactions like splitting a bill or being thanked by family for helping them move aren’t supposed to be taxable. If you see that these charges are on your 1099-K, you need to reach out to the issuer.
Tax Changes Made Charitable Deductions Harder to Claim on Your Tax Return
The rundown on this is that, if you made charitable donations in 2022, you need to itemize. Prior to the 2022 tax season, there was a standard deduction of $300 to $600. There is no standard deduction this year and you will have to itemize.
Questions or comments? Contact our team for support today. Let’s get the ball rolling on your tax return!