New Tax Laws For 2022 Tax Filing: Everything You Need to Know About New IRS Changes

With tax season right around the corner, Americans are gearing up to file their tax returns. But with the new year the Internal Revenue Service (IRS) has made some changes to tax deductions, credits and filing mandates that will affect your 2022 taxes. Staying up to date on the new changes can help you be fully prepared to file your taxes and ensure you make the most of the new tax laws, deductions and credits for 2022.

What 2021 tax rules are going away?

The IRS has made a lot of changes to tax rules for the 2022 tax return, impacting tax credits and deductions for the 2022 tax filing.

Child and Dependent Care Credit

The American Rescue Plan Act of 2021 expanded the 2021 Child and Dependent Care Credit. You could get up to a 50% credit on $8,000 for a child below the age of thirteen for childcare expenses like daycare. You could also claim this for an incapacitated spouse or parent so that you could be able to go to work, which includes someone who has suffered an injury or disease and can’t sign off on their tax return. Another option was to get a credit of up to 50% on $16,000 in childcare expenses for two or more dependents.

The credit was fully refundable if you lived in the US for more than half the year. When a credit is refundable, you can claim it as a refund even if you don’t owe any taxes. Also, if your Adjusted Gross Income (AGI) was over $125,000, the credit amount would have begun to phase out.

With the tax update in 2022, you can now get up to a 35% credit on $3,000 of your child care expenses for a child under the age of 13 or a spouse or parent that’s incapacitated. If you have two or more dependents, you can receive up to a 35% credit on $6,000 of childcare expenses. If your AGI is over $15,000, the credit amount decreases. With these new changes for 2022, you won’t be receiving as much support from the IRS for childcare expenses, like daycare or hiring a nanny.

2022 tax changes: Child Tax Credit

Raising kids is expensive, and with inflation affecting costs your monthly bill can be through the roof. The Child Tax Credit offers parents a way to offset the cost of raising children. In 2021, you could receive up to $3,600 for children under six and $3,000 for a child aged six to 17. This was the first time 17-year-old children could be claimed. Plus, the credit was fully refundable and available for single filers with income under $75,000 and married filers under $150,000. But that's all changed now.

The IRS announced the 2022 tax update for this credit, and it’s not good news. The Recovery Rebate Credit isn’t available for 2022. In 2021, if you were eligible for the third stimulus credit and didn’t receive the payment, you could claim the Recovery Rebate Credit, but that's no longer the case when it comes to your 2022 taxes.

Earned Income Tax Credit

The Earned Income Tax Credit is available to help taxpayers with low-to-moderate income levels get a tax break by helping reduce the tax owed.

For 2022, the age requirements revert to the old requirements before 2021, taxpayers must be 25 or under 65 without children and you can’t use any income from previous years to help qualify for the credit.

Charitable Contribution Deduction

Contributing to a charity, non-profit or other organization is one way to donate to a cause you support. It's also a way to receive tax deduction savings because the IRS allows taxpayers to deduct charitable donations from their taxes.

To help with COVID relief, the IRS allowed you to deduct up to $300 as a single filer and $600 as joint filers if you contributed to a qualifying charity and claimed the standard deduction.

For the 2022 tax filing period, you can’t claim the $300 or $600 deduction when claiming the standard deduction. You can still claim charitable contribution donations if you choose to itemize your deductions.

Self-Employed Sick & Family Leave Credits

This credit expired after the year 2021. The American Rescue Plan extended it through the 2021 tax year, but it’s no longer available.

Keeping track of the 2022 tax changes and maximizing tax savings can be challenging. But FlyFin takes care of your tax worries with a powerful A.I. and an expert CPA team helping you maximize your tax savings. You’ll never miss a single tax deduction again, and the expert CPA team is here to help with any questions 24/7.