Everything You Need to Know Before Filing Taxes for 2022
It’s time to start thinking about your taxes again. The 2022 tax year brings with it some pretty significant changes, especially t0 loans: many pandemic relief loans are ending this year, and there are also new electric vehicle loans to target. Here’s everything you need to know before applying.
Standard deduction higher than last year
Changes to the standard deduction are not exactly new, but knowing what to expect is still important. The standard deduction amounts increase from tax year 2021 :
- Single applicants: $12,950 (down from $12,550 in 2021)
- Joint applicants: $25,900 (up from $25,100 in 2021)
- Heads of Household: $19,400 (up from $18,800 in 2021)
You don’t have to worry about the $600 reporting threshold for Form 1099-K – for now
The American Plan of Rescue Act (ARPA) of 2021 lowered the reporting threshold for business revenue paid through “third party settlement organizations” – payment apps like Venmo, Cash App, etc. – from over $20,000 and 200 transactions up to $600. This is a huge change, and for obvious reasons, everyone involved in this went berserk . In response , the IRS abandoned the implementation of the new reporting threshold and instead made 2022 a “transitional” year (emphasis added) :
[F]or calendar year 2022, third-party clearinghouses issuing Forms 1099-K, payment cards, and third-party network transactions must only report transactions where gross payments exceed $20,000 and there are more than 200 transactions .
If you conduct business through third party payment applications, you should only receive a Form 1099-K from those applications if you have made more than 200 transactions of more than $20,000. Otherwise, you are set until next year. (And if you’re only using Venmo, Cash App, and other payment apps to split personal expenses like rent, utilities, restaurant checks, or gifts, you don’t need to worry about this form at all—it’s just for business income.)
Most tax breaks based on income and dependents are lower this year.
The coronavirus pandemic is far from over, but the temporary tax breaks it inspired are surely over. The maximum credit amounts for the Child Tax Credit (CTC), Earned Income Tax Credit (EITC), and Child and Dependent Care Credit (CDCC) are significantly lower than in tax year 2021 . Here are the new amounts:
- CTC: $2,000 per dependent (up from $3,600 per dependent in 2021)
- EITC: $500 for eligible taxpayers without children (down from $1,500 in 2021)
- CDCC: $2,100 maximum (up from $8,000 maximum in 2021)
However, not all dependent loans are down this year. If you apply for the EITC and have three or more children, you may receive slightly more money than last year: the maximum credit is $6,935 for eligible taxpayers who have three or more eligible children ( compared to $6,728 in tax year 2021). (You can learn more about EITC eligibility and benefits in the IRS loan guide .)
No more donations
In tax year 2021, applicants could receive both the standard deduction and an additional deduction for charitable donations up to $600. This is no longer an option. If you still want to deduct your charitable donations from your 2022 return, you will need to list them.
There is still no income limit for premium tax credits
Due to the coronavirus pandemic, the income ceiling for tax credits on health insurance premiums (usually 400% of the federal poverty line) has been lifted for tax years 2021 and 2022. This means that you can qualify for a credit on your taxes this year, even if you are over 400% of the federal poverty line. To qualify, you must meet certain eligibility requirements and file Form 8962 Premium Tax Credit (PTC) with your tax return.
Changes in Eligibility for the Clean Vehicle Tax Credit
The Inflation Reduction Act of 2022 provides tax credits of up to $7,500 for the purchase of a qualified new electric vehicle or light truck. Under IRS Code 30D, qualified cars and trucks must :
- Have an external charger
- Have a gross vehicle weight rating of less than 14,000 pounds
- Be manufactured by a manufacturer that has not sold more than 200,000 electric vehicles in the US.
There are also certain property requirements. You should have taken possession of your car in 2022 and used it primarily in the US. You must also buy the vehicle for personal use only and not for resale. If you are eligible and wish to apply for a loan, be sure to complete Form 8936, Qualified EV Loan (Including Certified Two-Wheeled EV Vehicles) along with the declaration. And if you need to talk to a real person at the IRS, here’s how .