Tax Changes 2022

01
California Residents
  • Federal law requires the Franchise Tax Board (FTB) to mail taxpayers who itemize and received a refund, or who received an interest payment of $10 or more, or who received a Middle-Class Tax Refund (MCTR) payment of $600 or more one or more of the following:
    • Form 1099-G, Report of State Income Tax Refund
    • Form 1099-Gs, will specify from which tax year the refund originated.
    • Form 1099-INT, Statement of Interest Income.
    • FTB issues Form 1099-INTs for all interest paid during the 2022 calendar year, regardless of tax year.
    • Form 1099-MISC, Middle Class Tax Refund (MCTR).
    • FTB issues Form 1099-MISC for MCTR payments of $600 or more.
02
Daycare and Dependent Care Credit
  • For 2022, the credit for child and dependent care expenses is nonrefundable and you may claim the credit on qualifying employment-related expenses of up to $3,000 if you had one qualifying person, or $6,000 if you had two or more qualifying persons.
  • The maximum credit is 35% of your employment-related expenses. The more you earn the lower the percentage of employment-related expenses that are considered in determining the credit.
  • The maximum credit is 20% of your employment-related expenses if adjusted gross income is over $43,000.
03
Education Credits
  • The Lifetime Learning Credit is phased out for taxpayers with modified adjusted gross income in excess of $80,000 ($160,000 for joint returns). (Post-baccalaureate you can only claim Tuition)
  • The American opportunity credit is available for four years working towards a Bachelor's degree, expenses include tuition, textbooks, supplies, hardware, and software.
  • To qualify for max credit, modified adjusted gross income (MAGI) must be $80,000 or less ($160,000 or less for married filing jointly).
  • You'll receive a reduced amount of the credit if your MAGI is over $80,000 but less than $90,000 (over $160,000 but less than $180,000 for married filing jointly).
  • You cannot claim the credit if your MAGI is over $90,000 ($180,000 for joint filers).
04
Educators
  • Maximum educator expense deduction rises to $300 in 2022
05
Adoption Credits
  • The maximum credit allowed for adoptions for tax year 2022 is the amount of qualified adoption expenses up to $14,890, up from $14,440 for 2021.
06
ACA Individual Mandate Penalty is imposed by States
  • No federal penalty
  • Some states have implemented their own individual mandates and associated penalties. (for example, in California, individuals without healthcare coverage for the year 2022 will have to pay a flat rate amount of $850 per adult and $425 per dependent child under 18 or a percentage of household income = 2.5% of the amount of gross income that exceeds the filing threshold requirements based on the tax filing status and number of dependents) A family of four who goes uninsured for the whole year will owe at least $2,550.
07
Health Savings Accounts
  • For tax year 2022, participants who have self-only coverage in a Medical Savings Account, the plan must have an annual deductible that is not less than $2,450, up $50 from tax year 2021; but not more than $3,700, an increase of $100 from tax year 2021. For self-only coverage, the maximum out-of-pocket expense amount is $4,950, up $150 from 2021. For tax year 2022, for family coverage, the annual deductible is not less than $4,950, up from $4,800 in 2021; however, the deductible cannot be more than $7,400, up $250 from the limit for tax year 2021. For family coverage, the out-of-pocket expense limit is $9,050 for tax year 2022, an increase of $300 from tax year 2021.
08
Foreign Earned Income Exclusion
  • The foreign earned income exclusion is $112,000
09
Alternative Minimum
  • In 2022 the exemption from the alternative minimum tax increased to $75,900 with a phase out at $539,900 for Single Taxpayers or Head of Household and ($118,100 for Married Filing Jointly with a phase out at ($1,079,800 ) Married Filing Separately $59,050
  • The AMT exemption amount for certain individuals under 24 equals their earned income plus $8,200
10
To Qualify as a Dependent
  • More than half of the support
  • Lives with dependent
  • Parents or guardians can still claim adult dependent children to benefit from educational credits. i.e. Bachelor's degree expenses include tuition, textbooks, supplies, hardware, and software. (Post-baccalaureate you can only claim Tuition)
  • If you have earned income under the filing threshold you may qualify to be claimed as dependent
  • If you are a dependent of another taxpayer you might still need to file. Check with your eTax Professional
  • If you are a U.S. citizen or resident alien living or traveling outside the United States, you generally are required to file income tax returns, estate tax returns, and gift tax returns and pay estimated tax in the same way as those residing in the United States
Qualifying Relative Dependents
  • The gross income limitation for a qualified relative is under the filing threshold
  • Lives with or is related to you,
  • Is supported (generally more than 50%) by you, and
  • Is neither your qualifying child nor the qualifying child of anyone else.
(If full-time students under the age of 24, the income can be higher)
11
Gift Exclusion
  • The annual exclusion for gifts increases to $16,000 for calendar year 2022, up from $15,000 for calendar year 2021.
  • For tax years beginning in 2021, § 6039F authorizes the Treasury Department and the Internal Revenue Service to require recipients of gifts from certain foreign persons to report these gifts if the aggregate value of gifts received in the tax year exceeds $17,339
12
Adoption Credit
  • The maximum credit allowed for adoptions for tax year 2021 is the amount of qualified adoption expenses up to $14,890
13
Health Savings Accounts and Other Tax-Favored Health Plans
  • For the taxable years beginning in 2022, the dollar limitation for employee salary reductions for contributions to health flexible spending arrangements increases to $2,850. For cafeteria plans that permit the carryover of unused amounts, the maximum carryover amount is $570
14
Earned Income Credit
  • The tax year 2022 maximum Earned Income Tax Credit amount is $6,935 for qualifying taxpayers who have three or more qualifying children, up from $6,728 for tax year 2021. The revenue procedure contains a table providing maximum EITC amount for other categories, income thresholds and phase-outs.
15
Tax Filing requirements 2022
  • Generally, you must file a return if your gross income from worldwide sources is at least the amount shown for your filing status as follows:
    • Single $12,950
      • Age 65 and older: $14,700
    • Married filing Jointly: $25,900
      • One spouse is 65 and older: $27,300
      • Both spouses 65 and older: $28,700
    • Married Filing Separately: $5
    • Head of Household: $19,400
      • Age 65 and older: $21,150
    • Qualifying Widower: $25,900
      • 65 and older: $27,300
    • Independent Contractors
      • Net earnings from self-employment of at least $600
Note: Students under age 24 years of age, can file taxes completely independent or as a dependent by someone else.

  • You must file a return if any of the seven conditions below apply
    • Owe any special taxes, including any of the following.
      • Alternative minimum tax
      • Additional tax on a qualified plan, including an individual retirement arrangement (IRA), or other tax-favored account. But if you are filing a return only because you owe this tax, you can file Form 5329 by itself
      • Household employment taxes. But if you are filing a return only because you owe this tax, you can file Schedule H by itself
      • Social security and Medicare tax on tips you didn't report to your employer or on wages you received from an employer who didn't withhold these taxes
      • Write-in taxes, including uncollected social security and Medicare or RRTA tax on tips you reported to your employer or on group-term life insurance and additional taxes on health savings accounts. See the instructions for Schedule 2, line 8
      • Recapture taxes. See the instructions for line 16 and Schedule 2, lines 7b and 8
      • You (or your spouse, if filing jointly) received health savings account, Archer MSA, or Medicare Advantage MSA distributions
      • You had net earnings from self-employment of at least $400.
      • You had wages of $108.28 or more from a church or qualified church-controlled organization that is exempt from employer social security and Medicare taxes
      • Advance payments of the premium tax credit were made for you, your spouse, or a dependent who enrolled in coverage through the Marketplace. You or whoever enrolled you should have received Form(s) 1095-A showing the amount of the advance payments
      • Advance payments of the health coverage tax credit were made for you, your spouse, or a dependent. You or whoever enrolled you should have received Form(s) 1099-H showing the amount of the advance payments
      • You are required to include amounts in income under section 965 or you have a net tax liability under section 965 that you are paying in installments under section 965(h) or deferred by making an election under section 965(i)

    If you are a U.S citizen or resident alien living or traveling outside the United States, you generally are required to file Income Tax returns, esttate tax returns, and gift tax returns and pay estimated tax in the same way the as those residing in the United States.
16
Standard Deduction 2022
  • Singles and Married filing Separately $12,950
  • Married Filing Joint $25,900
  • Head of Household $19,400
For 2022, as in 2021, 2020, 2019 and 2018, there is no limitation on itemized deductions, as that limitation was eliminated by the Tax Cuts and Jobs Act.
17
Dependent Tax Filing requirements
  • Single and under 65
    • Unearned income of: $1,150
    • Earned income $12,950
    • Gross income was more than the larger of
      • $1,150 or
      • Earned income (up to $12,550) plus $400
  • Single 65+
    • Unearned income of: $2,900 ($4,650 if 65 or older and blind)
    • Earned income $14,700 ($16,450 if 65 or older and blind).
    • Gross income was more than the larger of
      • $2,900 ($4,650 if 65 or older and blind)
      • Earned earned income (up to $12,550) plus $2,150 ($3,900 if 65 or older and blind
  • Married and under 65
    • Unearned income was over $1,150
    • Earned income was over $12,950
    • Gross income was at least $5 and your spouse files a separate return and itemizes deductions
    • Gross income was more than the larger of
      • $1,150, or
      • Earned income (up to $12,550) plus $4000.
  • Married 65+
    • Unearned income was over $2,550 ($3,950 if 65 or older and blind).
    • Earned income was over $14,350 ($15,750 if 65 or older and blind).
    • Gross income was at least $5 and your spouse files a separate return and itemizes deductions.
    • Gross income was more than the larger of
      • $2,550 ($3,950 if 65 or older and blind), or
      • Earned income (up to 12,550) plus $1,800 ($3,200 if 65 or older and blind).
18
Health Savings Accounts and Other Tax-Favored Health Plans
  • For tax year 2022, the monthly limitation for the qualified transportation fringe benefit and the monthly limitation for qualified parking increases to $280.
19
Contributions to Retirement Accounts
  • HSA contributions
    • Self-only coverage: $3,650
    • Family coverage: $7,300
    • HSA catch-up contributions (age 55 or older): $1,000
  • 457
    • Limit: $20,500
    • Age 50 Catch-up Limit: $6,500
    • Pre-Retirement Catch-up limit: $20,500
  • 401 (a)
    • Limit: $61,000
  • 401 (k)
    • Limit: $20,500
    • Age 50 Catch-up Limit: $6,500
  • 403 (b)
    • Limit: $20,500
    • Age 50 Catch-up Limit: $6,500
    • Pre-Retirement Catch-up limit: $15,500 lifetime cap
  • IRA
    • Limit: $6,000
    • Age 50 Catch-up Limit: $1,000

2022 Income Tax Brackets

2022 Federal Income Tax Brackets
Tax Rate Single Married, filing jointly Married, filing separately Head of Household
10% $0 to $10,275 $0 to $20,550 $0 to $10,275 $0 to $14,650
12% $10,276 to $41,775 $20,551 to $83,550 $10,276 to $41,775 $14,651 to $55,900
22% $41,776 to $89,075 $83,551 to $178,150 $41,776 to $89,075 $55,901 to $89,050
24% $89,076 to $170,050 $178,151 to $340,100 $89,076 to $170,050 $89,051 to $170,050
32% $164,926 to $209,425 $329,851 to $418,850 $164,926 to $209,425 $164,901 to $209,400
35% $215,951 to $539,900 $431,901 to $647,850 $215,951 to $323,925 $215,951 to $539,900
37% $523,601 or more $628,301 or more $314,151 or more $523,601 or more