Reminders for the 2022 Tax Season

The new year is here, but we aren’t leaving 2022 behind just yet! It’s time to brace ourselves for the 2022 tax season. According to a survey from the Pew Research Center, over half of Americans dislike filing their taxes. Could such distaste be due to the ever-changing rules and regulations? The copious amounts of forms to fill out? The scramble to collect necessary documents? …Yeah, it’s no surprise filing taxes isn’t America’s favorite pastime.

That’s why we at Cowen Tax Advisory Group aim to make the tax filing process as easy as possible! Here are some reminders to keep things running smoothly:

Tax Credit Changes 

The world has begun to make considerable strides since the blindside that was the COVID-19 pandemic. While this is great news on virtually all measures, unfortunately, tax credit increases due to the pandemic are being phased out. 

Tax credit decreases will be most felt by families with children and other dependents. The child tax credit, for example, was up to $3,600 per child under 6 years of age and up to $3,000 for those between 6 and 17 during the 2021 tax filing season. For 2022, each eligible child qualifies for a $2,000 credit, regardless of age. Likewise, the child and dependent care tax has also returned to pre-pandemic numbers. While the credit was up to $8,000 for a single dependent and up to $16,000 for multiples, those who qualify will now get a credit maxing out at $3,000 or $6,000 respectively. If you previously received these credits and plan to claim them again, make sure to keep your expectations in check. 

Tax Deduction Changes

Just as with tax credits, there are changes to deductions this time around as well. In 2021, taxpayers could claim up to a $600 charitable deduction for their taxes, regardless of how they filed them. This is no longer the case: for 2022, those wishing to take advantage of the charitable deduction must itemize rather than take the standard deduction. Keeping this in mind, it only makes sense to use the charitable deduction if your itemized deductions exceed the standard amount.

And just what is that amount? For a tiny piece of good news among these changes, the standard deduction is up slightly this year. The amount for 2022 is $25,900 for those filing jointly and $12,950 for single filers, a $400 increase from 2021. 

Updates to Form 1099-K

Do you run an online business or make extra money by delivering for companies like Doordash? If yes, you may find Form 1099-K in your mailbox by the end of January. Previously, this form was for people who made over $20,000 through such methods over the course of 200 transactions. Starting in 2022, the new threshold is significantly lower at $600, with no transaction minimum necessary. While the IRS put out a statement delaying this for those who would qualify through the use of third-party payment platforms, like Paypal, more people who never received a 1099-K form before should anticipate receiving it this year.

Documents to Remember

Our tax preparation team knows how easy it is for documents to get left behind during the tax-gathering shuffle. Consider this a reminder to bring these documents to your tax appointment if they apply to you:

• Rental property records organized, including summary of income and expenses

• Self-employment records, organized including summary of income and expenses 

• Records of property taxes, medical expenses, charitable contributions, and mortgage interest 

• Records of education expenses and student loan interest paid, including Form 1098-T

• Health Saving Account (HSA) forms: Form 1099-SA and Form 5498-SA

Not sure if something applies to your tax return? Bring it! An unnecessary document can easily be stored away later, but a forgotten one can cause delays neither you nor your tax preparer will be happy about. 

Now you’re a bit more prepared to tackle the 2022 tax season – though if you’re not quite excited, who could blame you? If you’re in need of good news regarding your tax return, contact Cowen Tax Advisory Group. With over 44 years of tax planning experience, we will help you implement the best methods to save on taxes for 2022 and beyond. Schedule a free consultation today! 

Lindsey Restelli

lindsey@cowentaxgroup.com

As Cowen Tax Advisory Group’s Digital Marketing Assistant, Lindsey provides in-house copywriting and manages the company’s electronic records system, email marketing, and blog.