What's New in 2022
Here are some key changes to the tax code for 2022. Use this information to help understand your 2022 tax obligations and how it may change from last year’s tax return.
New in 2022
Reporting of digital payments expands dramatically. If you receive more than $600 in digital payments and the IRS deems it to be business related, you will receive 1099-Ks this January. So if you use reseller platforms, receive digital payments through applications like Venmo, or digitally resell tickets, expect a more complicated tax return.
Increased tracking of virtual currency transactions. More stringent reporting of cryptocurrency transactions to the IRS by brokers and dealers begins in 2023. Please be aware that many of these firms are implementing these changes throughout 2022.
Increased teacher deduction. The deduction for out-of-pocket classroom supplies for teachers is $300, up from $250. If you’re married, you can deduct up to $600.
Electric vehicle credit extended. The $7,500 tax credit for purchasing an electric vehicle has been extended through 2032. The problem, though, is that there are many, many more hurdles you'll have to clear before you can claim the credit.
High efficiency home improvements credit extended. Qualifying high efficiency home improvements now qualify for an annual $1,200 credit, up from a $500 maximum lifetime credit. Energy efficient heat pumps, heat pump water heaters, central air conditioners, wood stoves, and natural gas or oil furnaces or boilers qualify for a $2,000 credit.
Last chance for small business tax rules
Two popular business rules are currently set to expire at the end of 2022 unless extended by Congress. Both involve small business expense deductibility.
100% meal deductibility. Business meals are typically only deductible at 50%. To help aid restaurants recover from the pandemic, you may deduct 100% of qualified meal expenses thru 2022.
100% bonus depreciation. This is the final year that qualified business assets can be completely expensed using the 100% additional first year bonus depreciation deduction. The bonus depreciation deduction decreases to 80% in 2023, 60% in 2024, 40% in 2025 and 20% in 2026 before expiring after December 31, 2026.
Other key changes
Charitable giving deductions. The deduction for charitable giving for taxpayers who don’t itemize is no longer available in 2022. This $300 reduction in income for single filers ($600 for married taxpayers) is now expired. You may now only deduct qualified charitable deductions if you itemize deductions on your tax return AND all qualified deductions exceed $12,950 if single and $25,900 if married filing jointly.
Child tax credit. The advance payment of one half of this credit is gone and the dollar amount for each qualifying child rolls back to 2020 limits of $2,000 per child. Last year you could receive as much as $3,600 per child.
Dependent care credit. The maximum tax credit you can earn for qualified childcare expenses is $1,050 for one qualifying individual (down from $4,000) or $2,100 for two or more qualifying individuals (down from $8,000).
Mortgage insurance premium deductibility. This itemized deduction is back on the shelf for 2022 unless it is again extended by Congress. The 2017 Tax Cuts and Jobs Act eliminated this deduction, but it was reinstated by Congress as an itemized deduction through the end of 2021.
Now is the time to review your situation to determine how these and other changes will impact your tax return in 2022.