Actualizaciónes

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STANDARD DEDUCTION FOR 2022

TAX RATES FOR 2022

CHILD TAX CREDIT UPDATE

Important changes to the Child Tax Credit are helping many families get advance payments of the credit:

Half the total credit amount is being paid in advance monthly payments.
You claim the other half when you file your 2021 income tax return.

Advance payments are sent automatically to eligible people. You do not need to take any action if the IRS has your tax information.

OTHER IMPORTANT TAX UPDATES FOR 2022

Federal Estate Tax Exemption

The federal estate tax exemption for decedents dying in 2022 will increase to $12.06 million per person or $24.12 million for a married couple.

Gift Tax Exclusion

The annual exclusion for federal gift tax purposes jumps to $16,000 for 2022, up from $15,000 in 2021.

Popular Tax Credits And Deductions 2022

Earned Income Tax Credit

For tax year 2022, the maximum earned income tax credit amount is $6,935 for qualifying taxpayers who have three or more qualifying children. Phaseouts apply.

Child Tax Credit

Without congressional action on the Build Back Better Act, in 2022, the Child Tax Credit would revert back to $2,000 per qualifying child, subject to income phaseouts starting at $400,000 for joint filers and $200,000 for singles. Joint filers with $440,000 of income get no credit.

Adoption credit

The tax credit for an adoption of a child with special needs is $14,890 for 2022. The maximum credit allowed for other adoptions is the amount of qualified adoption expenses up to $14,890. The credit begins to phase out for taxpayers with modified adjusted gross income (MAGI) in excess of $223,410, and it’s completely phased out at $263,410 or more.

Lifetime Learning Credit

This education tax credit is phased out for single taxpayers with MAGI in excess of $80,000, and for joint filers with $160,000, for 2022.

Student Loan Interest Deduction

The $2,500 deduction for interest paid on student loans begins to phase out when modified adjusted gross income hits $70,000 ($145,000 for joint returns) and is completely phased out when MAGI hits $85,000 ($175,000 for joint returns).

Elementary and Secondary School Teachers Expenses

In 2022, qualifying teachers can claim $300 for expenses paid or incurred for books, supplies (other than nonathletic supplies for courses of instruction in health or physical education), computer equipment (including related software and services) and other equipment, and supplementary materials used in the classroom. That’s up from $250 in 2021

Commuter benefits. The monthly limit for 2022 contributions to qualified parking and transit accounts is $280. If you pay to park and ride, you get to double dip.

Flexible Savings Accounts

The dollar limit for 2022 contributions to a flexible savings account is $2,850. For plans that allow carryovers, the carryover limit is $570.

There are no PEASE limits on itemized deductions.

As of now, the $300 charitable deduction ($600 for joint filers) that was available to nonitemizers in 2021 has not been extended for 2022.

RETIREMENT CONTRIBUTION CHANGES FOR 2022

401(k) Plans

The annual contribution limit for employees who participate in 401(k), 403(b), most 457 plans and the federal government’s Thrift Savings Plan is $20,500 for 2022—a welcome increase after two years at $19,500. Note, you can make changes to your 401(k) election at any time during the year, not just during open enrollment season when most employers send you a reminder to update your elections for the next plan year.

The 401(k) Catchup

The catch-up contribution limit for employees age 50 or older in these plans remains steady: it’s $6,500 for 2022. Even if you don’t turn 50 until December 31, 2022, you can make the additional $6,500 catch-up contribution for the year.

SEP IRAs and Solo 401(k)s

For the self-employed and small business owners, the amount they can save in a SEP IRA or a solo 401(k) goes up from $58,000 in 2021 to $61,000 in 2022. That’s based on the amount they can contribute as an employer, as a percentage of their salary; the compensation limit used in the savings calculation also goes up from $290,000 in 2021 to $305,000 in 2022.

Aftertax 401(k) contributions

If your employer allows aftertax contributions to your 401(k), you also get the advantage of the new $61,000 limit for 2022. It’s an overall cap, including your $20,500 (pretax or Roth in any combination) salary deferrals plus any employer contributions—but not catch-up contributions, which can be saved on top.

The SIMPLE

The contribution limit for Simple retirement accounts jumps from $13,500 in 2021 to $14,000 in 2022. The Simple catch-up limit is still $3,000.

Individual Retirement Accounts

The limit on annual contributions to an Individual Retirement Account (pretax or Roth or a combination) remains at $6,000 for 2022. The catch-up contribution limit, which is not subject to inflation adjustments, remains at $1,000. (Remember that 2021 IRA contributions can be made until April 15, 2022, and 2022 IRA contributions can be made until April 15, 2023.)

Deductible IRA Phaseouts

You can earn a little more in 2022 and get to deduct your contributions to a traditional pretax IRA. Note: Even if you earn too much to get a deduction for contributing to an IRA, you can still contribute—it’s just nondeductible.

In 2022, the deduction for taxpayers making contributions to a traditional IRA is phased out for singles and heads of household who are covered by a workplace retirement plan and have modified adjusted gross incomes (AGI) between $68,000 and $78,000, up from $66,000 and $76,000 in 2021. For married couples filing jointly, in which the spouse who makes the IRA contribution is covered by a workplace retirement plan, the income phaseout range is from $109,000 to $129,000 for 2022, up from $105,000 to $125,000 in 2021.

For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple’s income is between $204,000 and $214,000 in 2022, up from $198,000 and $208,000 in 2021.

Roth IRA Phaseouts

The inflation adjustment helps Roth IRA savers too. In 2022, the AGI phaseout range for taxpayers making contributions to a Roth IRA is from $204,000 to $214,000 for married couples filing jointly, up from $198,000 to $208,000 in 2021. For singles and heads of household, the income phaseout range is $129,000 to $144,000 in 2022, up from $125,000 to $140,000 in 2021.

If you earn too much to open a Roth IRA, you can open a nondeductible IRA and convert it to a Roth IRA as Congress lifted any income restrictions for Roth IRA conversions. This is called the backdoor Roth IRA.

Saver’s Credit

The income limit for the saver’s credit for low- and moderate-income workers is $68,000 for married couples filing jointly for 2022, up from $66,000; $51,000 for heads of household, up from $49,500; and $34,000 for singles and married filing separately, up from $33,000.