10 Tax Changes That Could Affect the Size of Your Refund Next Year

As the termination of 2022 approaches, now’s a lot of fun to get a head start on tax season. Though your federal taxation statements are not due until April 18, 2023, there had been a complete lot of tax changes in 2022 that are likely to change the amount of your tax refund. 

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Many of the tax that is pandemic through the past couple of years, like the expanded child tax credit, child and dependent care credit and stimulus payments ended at the conclusion of 2021, that may mean your refund should be a tiny bit smaller this present year. And, you may find you owe taxes this year.

When it comes to taxes, 2022 is the year of the great reset, said Mark Steber, chief tax information officer for Jackson Hewitt if you. “A lot of things that were put into place for 2021, and some part 2020, will revert back to pre-pandemic years, which can lead to refund shock or, more importantly, balance-due shock.” PayPal, CashApp and VenmoIn addition, some regulations that are new added to place. Third-party payment apps like borrowers in some states will now be money that is reporting by freelancers throughout the year to the IRS. Student loan forgiveness — if passed — is exempt from federal taxation, but* that is( may owe taxes. Not only that, should you decide had any* that is( the IRS wants to know about it.

There’s a lot to cover, so we’ll walk you through the most significant tax changes to prepare for this tax season that is upcoming.

1. The deduction that is standard 2022 is higher standard deduction to increaseIt’s typical for the

a little each year, along with the rate of inflation. The standard deduction for single tax filers has been increased to $12,950 (up by $400), and has been bumped to $25,900 for those married filing jointly (up by $800) for your 2022 tax return. like self-employment tax breaksThe standard deduction is exactly what most taxpayers with simple taxation statements state they reduce their taxable income. The standard deduction likely makes sense for you if you receive a traditional paycheck through an employer and aren’t eligible for many special deductions or credits. You would not claim the standard deduction if you have expenses or individual deductions you’d rather claim.

2. Income tax brackets will also be higher in 2022income tax brackets were also raisedFor 2022,

to account fully for inflation. Your revenue bracket makes reference to how tax that is much owe based on your adjusted gross income, which is the money you make before taxes are taken out, excluding itemized exemptions and tax deductions.

While the changes were slight, you may have bumped down to a lower rate for your 2022 tax return if you were at the bottom of a higher tax bracket in 2021.

2022 tax brackets for single filers Taxable income
Federal tax rate $10,275 or less
10% $10,276 – $41,775
$1,027.50 plus 12% of income over $10,275 $41,776 – $89,075
$4,807.50 plus 22% of income over $41,775 $89,076 – $170,050
$15,213.50 plus 24% of income over $89,075 $170,051 – $215,950
$34,647.50 plus 32% of income over $170,050 $215,951 – $539,900
$49,335.50 plus 35% of income over $215,950 $539,901 or maybe more

$162,718 plus 37% of income over $539,900

2022 tax brackets for taxpayers who happen to be married, filing jointly Taxable income
Federal tax rate $20,550 or less
10% $20,551 – $83,550
$2,055 plus 12% of income over $20,550 $83,551 – $178,150
$9,615 plus 22% of income over $83,550 $178,151 – $340,100
$30,427 plus 24% of income over $178,150 $340,101 – $431,900
$69,295 plus 32% of income over $340,100 $431,901 – $647,850
$98,671 plus 35% of income over $431,900 $647,851 or maybe more

$174,253.50 plus 37% of income over $647,850

3. the little one tax credit benefits has gone back to normaltemporary expansion of the child tax creditWhile 2021 had a*) that is( including eligibility for more dependent children and offering advance payments, that isn’t the case for your 2022 taxes.

The CTC has dropped back down to its amount that is pre-pandemic–2,000 per child or dependent — and it is now only readily available for children under 17 years old. The financing, that was fully refundable year that is last is now only partially refundable to some lower-income parents, and advance payments are no longer in effect. (Partially refundable means you can only receive a portion of this credit as a refund, though the amount that is full be used to your goverment tax bill.) some states are offering child tax credit benefitsThat said, you need to still claim the CTC in 2022 if eligible — it will also help raise your refund or might help offset a tax bill. And, while federal benefits have decreased,

this and next year. 

4. Fewer filers will qualify for the Child Care and Dependent Tax credit

In 2021, the Child Care and Dependent Tax Credit also received expansions that are temporary allowing individuals who made $125,000 or less to deduct between 20% to 50% of $4,000 (or $8,000 for parents using more than one youngster) in qualifying child care expenses. It had been also refundable. reverted backFor 2022, this tax break has also

 to exactly what it was a student in 2020. Now, parents with one youngster can simply claim as much as 35% of at the most $3,000 in qualifying expenses, for a amount that is maximum of1,050. Parents with more than one child are eligible for up 35% of up to $6,000 in qualifying expenses, for a amount that is maximum of2,100.

The biggest difference may be the income qualification. To get this credit in full in 2022, you really need to have made $15,000 or less — a steep drop from 2021’s $125,000 income threshold — though households earning as much as $438,000 will get no less than credit that is partial.

5. This year

Last year, more Americans were eligible to claim the Earned Income Tax Credit on their 2021 tax returns if you don’t have kids, it’s harder to qualify for the Earned Income Tax credit. This present year,

to its pre-pandemic rules.

For your 2022 tax return, the most you’ll be able to claim when it comes to EITC if you fail to have kids or dependents is $560, a $942 decrease from this past year’s maximum of $1,502. The age requirements have likewise shifted back once again to the rules that are original you must be between 25 and 65 to qualify.

However, the income requirements for the EITC and credits that are maximum individuals with children have raised slightly because of inflation. The income that is 2022 and maximum credit information are below:  2022 EITC income thresholds (for optimum credit) Number of dependents
Filing as Single, Head of Household or Widowed Married Filing Jointly 0
$16,480 $22,610 1
$43,492 $49,622 2
$49,399 $55,529 3+


EITC maximum credit for 2022 Number of dependents Maximum credit in 2022( credit that is*)Maximum 2021
Difference 0 $560 $1,502
$942 decrease 1 $3,733 $3,618
$115 increase 2 $6,164 $5,980
$184 increase 3 or maybe more $6,935 $6,728

$207 increase

6. In the event the college loans were forgiven, you might owe state taxeswidespread federal student loan reliefThough

remains on hold, you may possibly have received education loan forgiveness through the general public Service Loan Forgiveness program or other endeavor that is similar. You won’t owe federal taxes on the canceled amount if you had any balances forgiven in 2022. This is because of a provision tucked in to the 2021 American Rescue Plan, preventing forgiven education that is post-secondary from federal taxation through 2025.  IndianaHowever, there are a handful of states where loan that is forgiven could be taxed. MinnesotaMississippiNorth Carolina and 

 have confirmed they’re going to tax any education loan credit card debt relief on your own taxes that are 2022. A few other states may as well, though the details are still being hammered out.

And, you may be on the hook for county taxes on your debt relief, as well if you live in one of the states taxing forgiven student loans.

7. You must report your crypto and NFT transactions 

whilst not technically new, for 2022 the IRS is making an even more effort that is concerted track cryptocurrency sales and trades. You trigger a taxable event whenever you sell or trade your crypto or purchase an item with crypto. Currently, crypto is taxed like property, rendering it at the mercy of short- or capital that is long-term taxes. This also means any crypto can be reported by you losses to simply help offset any gains. Since 2022 saw a serious drop into the property value cryptocurrencies like bitcoin and ethereum, you may be able to reduce your tax bill by reporting your capital loss if you sold or traded your crypto at a loss. The same goes for NFTs. 

And though the IRS will flag any crypto that is unreported, if you do not report a loss of profits that will decrease your tax burden, the IRS will not adjust your return in your stead. “it off, it stays off,” said Steber if you leave. “Tax deductible losses from your currency that is virtual activity have real consequences on the tax return, and may help save you real dollars. That you don’t fully understand, you certainly should seek out guidance from a trained experienced tax professional. so I always tell people, if you’ve got something” top picks for crypto tax softwareIf you have a lot of crypto or NFT activity, we recommend talking to a tax expert. But If you’d rather handle your taxes on your own, check out our

to make filing your taxes a little easier.

8. PayPal, Venmo and other apps that are third-party report your repayments with the IRS

If you have been self-employed or freelancing for a couple years, you likely know already you are needed to report your freelance earnings with the IRS. This your earnings will be even easier for the IRS to access, since third-party payment apps are now reporting your payment activity to the IRS year. 

While you’ll still need to report your earnings like usual, the difference is, the IRS will be able to verify the amounts you report against the transactions the payment apps provide. So, if you’re off by $100, the IRS will know. 1099-K forms,This new regulation could help freelancers. Platforms like PayPal, Venmo, Cash App, Zelle and others will be users that are providing

which will make reporting your revenue a tiny bit easier. 

And don’t get worried — the amount of money you gifted to young kids is secure from taxes. Only earnings sent through these apps that are third-party subject to taxation.

No matter how you were paid, you take advantage of every eligible tax break if you had any self-employment income in 2022, Steber recommends working with a tax professional to make sure. “Self-employed men and women have a few of the most tax that is complex, and quite frankly, some of those lucrative tax benefits in the tax code to watch out for,” he said.

9. Retirement contribution limits increased401(k) contribution limit increased For 2022, the individual 

to $20,500, a $1,000 increase from 2021. If you’re over 50, you can contribute an additional $6,500. The contribution that is total, which include your employer’s contributions, is $61,000 for 2022 ($67,500 for those of you 50 or older). IRA contributions remained unchanged at $6,000 when it comes to year, with a $1,000 catch-up that is additional for those 50 or older. were also increased in 2022Contributions to SIMPLE IRAs

, rising from $13,500 to $14,000. Those over 50 can contribute an additional $3,000.maximize your retirement contributionsWith the end of the year fast approaching, 

 before the end of December. However, you can continue contributing for tax year 2022 until April 18, 2023, next year’s tax filing deadline.

More if you have an IRA Americans

this since the IRS increased the income thresholds for 2022 year. It’s worth up to $1,000 for single filers ($2,000 for married, joint filers), as long as you contribute to a retirement account and meet AGI requirements. For this tax year, your AGI must not be over $34,000 for single filers and those married filing separately, $68,000 for married, joint filers and $51,000 for head-of-household filers.claim charitable donation tax breaks10. Temporary donation that is charitable have ended

Fewer filers is able to

 because of this tax year. The expanded cash that is charitable benefits that were offered in 2020 and 2021 have ended. The suspension that is temporary of 60% AGI limit in 2020 and 2021 happens to be back, limiting the quantity you’ll be able to claim in charitable contributions.  (*) More tax advice(*)

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