WHAT IS NEW IN TAXES FOR 2022

Here are the inflation-adjusted and COLA numbers for tax year 2022 for use in Form 1040 tax planning and preparation.  I do not include information for business activities, except for QBI income thresholds.

 

Please note the following tax benefits expired on December 31, 2021 and are NOT available on the 2022 Form 1040 (or 1040-SR) –

 

·         the non-itemizer charitable deduction of up to $300 ($600 on a joint return),

·         the itemized deduction as interest for mortgage insurance premiums

·         the enhancements to the Child Tax Credit, Other Dependent Credit and the Credit for Child and Dependent Care Expenses

 

THE STANDARD DEDUCTION

 

·            Single and Married Filing Separate = $12,950

·            Married Filing Joint and Qualifying Widow(er) = $25,900

·            Head of Household = $19,400

 

The Standard Deduction for a dependent is the greater of (1) $1,150, or (2) the sum of $400 and the individual's earned income (not to exceed $12,950).

 

The additional Standard Deduction amount for the age 65 or older or blind is $1,400 for married individuals and $1,750 for Single and Head of Household.

 

PERSONAL EXEMPTION AMOUNT

 

There is no longer a personal exemption deduction.  However, the amount of the gross income limitation for determining if a person is a qualifying relative is $4,400. 

 

CONTRIBUTION LIMITS FOR TAX-DEFERRED PENSION PLANS -  

 

·         IRA = $6,000

·         IRA Catch-Up Contributions at age 50 and older = $1,000

·         SIMPLE Plan = $14,000

·         SIMPLE Catch-Up Contributions at age 50 and older = $3,000

·         401(k), 403(b), 457, and Thrift Savings Plan = $20,500

·         401(k), 403(b), 457, and Thrift Savings Plan Catch-Up Contributions at age 50 and older = $6,500

·         Maximum contribution to a SEP or Solo401(k) plan = $61,000.  Contributions are based on a percentage of “compensation” or adjusted net earnings from self-employment.   

 

The AGI phase-out range for contributions to a traditional IRA by taxpayers who are active participants in an employer retirement plan are -

 

·         $68,000 - $78,000 = Single and Head of Household

·         $109,000 - $129,000 = Married Filing Joint and Qualifying Widow(er)

·         $0 - $10,000 = Married Filing Separate

 

The deduction on a joint return for a spouse that is not an active participant in an employer plan, but who is married to one who is, phases out at AGI of $204,000 to $214,000.    

 

Individuals can make contributions to a traditional IRA account as long as they have qualified “compensation” – taxable salaries and wages, net earnings from self-employment as a sole proprietor or a partner, nontaxable combat pay, taxable alimony, and nontaxable difficulty of care payments – regardless of their age.     

 

The AGI phase-out range for taxpayers making contributions to a Roth IRA is -

 

·         $129,000 - $144,000 = Single and Head of Household

·         $204,000 - $214,000 = Married Filing Joint and Qualifying Widow(er)

·         $0 - $10,000 = Married Filing Separate

 

HEALTH CARE FLEXIBLE SPENDING ARRANGEMENT

 

The maximum amount that an employee can contribute to an employer-sponsored “pre-tax” Flexible Spending Arrangement (FSA) for health care expenses is $2,850.  The maximum carryover amount is $570.

 

HEALTH SAVING ACCOUNTS AND HIGH DEDUCTIBLE HEATH PLANS  

 

The Health Savings Account contribution limit is $3,650 for a self-only plan and $7,300 for a family plan.  The catch-up contribution for those age 55 or older is $1,000. 

 

The High Deductible Health Plan minimum deductible is $1,400 for a self-only plan and $2,800 for family coverage.

 

The High Deductible Health Plan maximum out of pocket is $7,050 for individuals and $14,100 for families.

 

EDUCATOR EXPENSES

 

The adjustment to income for expenses paid by grade K-12 teachers, instructors, counselors, principals, and aides for books, supplies, computer hardware, software, and services, equipment, personal protective equipment, and supplementary materials is limited to $300, or $600 on joint returns if both spouse quality.

 

STUDENT LOAN INTEREST

 

The deduction for student loan interest, capped at $2,500, phases out at AGI between $70,000 to $85,000 for Single, Head of Household and Qualifying Widow(er) and $145,000 to $175,000 for Married Filing Joint.  No deduction is allowed on a Married Filing Separate return.

 

LONG-TERM CARE INSURANCE PREMIUM AGE-BASED DEDUCTION LIMITS

 

·         Age 40 or less = $450

·         Age 41-50 = $850

·         Age 51-60 = $1,690

·         Age 61-70 = $4,510

·         Age 71 + older = $5,640

 

THE STANDARD MILEAGE ALLOWANCE

 

For January 1 – June 30, 2022, the standard mileage rates are -

 

•  58.5 cents per mile driven for business use

•  18 cents per mile driven for medical, or moving purposes for qualified active-duty members of the Armed Forces

•  14 cents per mile driven in service of charitable organizations  

 

For July 1 – December 31, 2022, the standard mileage rates are -

 

•  62.5 cents per mile driven for business use

•  22 cents per mile driven for medical, or moving purposes for qualified active-duty members of the Armed Forces

•  14 cents per mile driven in service of charitable organizations 

 

THE QUALIFIED BUSINESS INCOME DEDUCTION

 

SINGLE, HOH	MARRIED JOINT	MARRIED SEPARATE	QUALIFIED TRADE OR BUSINESS	SPECIFIED SERVICE TRADE OR BUSINESS
O – $170,050	0 – $340,100	0 - $170,050	20% DEDUCTION	20% DEDUCTION
$170,051 - $220,050	$340,101 – $440,100	$170,051 - $220,050	LIMITS PHASE IN	PHASES OUT
OVER $220,050	OVER $440,100	OVER $220,050	SUBJECT TO LIMITS	NO DEDUCTION

 

The income amount in the table is the AGI less the Standard Deduction or Itemized Deductions.

 

TAX RATE SCHEDULES 

 

Tax Rate	Single	Head of Household	Married Filing Joint Surviving Spouse	Married Filing Separately
10%	Up to $10,275	Up to $14,650	Up to $20,550	Up to $10,275
12%	$10,276 - $41,775	$14,651 - $55,900	$20,551 to $83,550	$10,276 to $41,775
22%	$41,776 - $89,075	$55,901 - $89,050	$83,551 to $178,150	$41,776 to $89,075
24%	$89,076 - $170,050	$89,051 - $170,050	$178,151 to $340,100	$89,076 to $170,050
32%	$170,051 - $215,950	$170,051 - $215,950	$340,101 to $431,900	$170,051 to $215,950
35%	$215,951 - $539,900	$215,951 to $539,900	$431,901 to $647,850	$215,951 to $323,925
37%	$539,901 or more	$539,901 or more	$647,851 or more	$323,926 or more

 

QUALIFIED DIVIDENDS AND LONG-TERM CAPITAL GAINS TAX RATES

 

RATE	SINGLE TAXPAYERS	MARRIED FILING JOINT	HEAD OF HOUSEHOLD	MARRIED FILING SEPARATE
0%	Up to $41,675	Up to $83,350	Up to $55,800	Up to $41,675
15%	$41,676 - $459,750	$83,351 - $517,200	$55,801 - $488,500	$41,676 - $258,600
20%	Over $459,750	Over $517,200	Over $488,500	Over $258,600

 

THE RETIREMENT SAVINGS CONTRIBUTIONS CREDIT  

 

CREDIT	JOINT	HEAD OF HOUSEHOLD	SINGLE OR SEPARATE
50% of first $2,000	$0 – $41,000	$0 - $30,750	$0 - $20,500
20% of first $2,000	$41,001 - $44,000	$30,751 - $33,000	$20,251 - $22,000
10% of first $2,000	$44,001 - $68,000	$33,001 - $51,000	$22,001 - $34,000

 

SAVINGS BOND INTEREST EXCLUSION FOR EDUCATION COSTS

 

The exclusion for interest earned on US Savings Bonds used for higher education expenses is phased out for AGIs of $85,800 to $100,800 for single filers (includes Head of Household and Married Filing Separate filers) and $128,650 to $158,650 for joint filers and Qualified Widow(ers).

 

THE ALTERNATIVE MINIMUM TAX

 

The AMT exemption amount is –

 

·         $  75,900 – Single and Head of Household

·         $118,100 - Married Filing Joint and Qualifying Widow(er)

·         $  59,050 - Married Filing Separate

 

The AMT exemption is reduced as Alternative Minimum Taxable Income exceeds –

 

·         $    539,900 – Single, Head of Household and Married Filing Separately

·         $1, 079,800 – Married Filing Joint and Qualifying Widow(er)

 

The 28% AMT tax rate kicks in at AMT net taxable income (after deducting the exemption allowed) of $206,100, or $103,050 for a married couple filing separately.

 

THE NET INVESTMENT INCOME TAX

 

The Net Investment Income Tax is 3.8% on the lesser of Modified Adjusted Gross Income (MAGI) in excess of the threshold amount for your filing status or net investment income.

 

The MAGI threshold amounts are:

 

Married Filing Jointly or Qualifying Widow(er) = $250,000

Single or Head of Household = $200,000

Married Filing Separately = $125,000

 

KIDDIE TAX

 

The amount which is used to reduce the net unearned income reported on the child’s return that is subject to the “kiddie tax” is $1,150.

 

NANNY TAX

 

Remuneration paid by an employer for domestic service in the employer's private home is not subject to FICA tax if the amount paid during the year is less than $2,400.

 

SOCIAL SECURITY AND MEDICARE

 

The wage base for computing the Social Security component of the FICA tax is $147,000.  The maximum withholding for Social Security tax is $9,114.00.

 

The Self-Employment Tax is a 12.4% Social Security tax on the first $147,000 of self-employment income, for a maximum of $18,228.00, plus a 2.9% Medicare tax on all self-employment income. 

 

An additional 0.9% Medicare Surtax is assessed on wages and self-employment income in excess of: 

 

Married Filing Jointly or Qualifying Widow(er) = $250,000

Single or Head of Household = $200,000

Married Filing Separately = $125,000

 

The earnings limit for those younger than full retirement age is $19,560. ($1 deducted from benefits for each $2 earned over $19,560).  The earnings limit for those turning full retirement age in 2021 is $ 51,960. ($1 deducted from benefits for each $3 earned over $51,960 until the month the worker turns full retirement age).  There is no limit on earnings for workers who are full retirement age all year.

 

The monthly Medicare premiums, based on AGI reported on 2020 tax returns are -

 

Beneficiaries who file individual tax returns with income	Beneficiaries who file joint tax returns with income	Monthly Surtax	Total Monthly Premium
Up to $91,000	Up to $182,000	$0.00	$170.10
$91,001 - $114,000	$182,001 - $228,000	$68.00	$238.10
$114,001 - $142,000	$228,001 - $284,000	$170.10	$340.20
$142,001 - $170,000	$284,001 - $340,000	$272.20	$442.30
$171,001 - $499,999	$340,001 - $749,999	$374.20	$544.30
More than $500,000	More than $750,000	$408.20	$578.30

 

Married beneficiaries who lived with spouses any time during year who file separate returns with income	Monthly Surtax	Total Monthly Premium
Up to $91,000	$0.00	$170.10
$91,001 - $408,999	$374.20	$544.30
$409,000 or more	$408.20	$578.30

 

The 2022 surtaxes for Medicare Part D premiums are –

Beneficiaries who filed 2020 individual tax returns with MAGI	Beneficiaries who filed 2020 joint tax returns with MAGI	Monthly Surtax
Up to $91,000	Up to $182,000	$0.00
$91,001 - $114,000	$182,001 - $228,000	$12.40
$114,001 - $142,000	$228,001 - $284,000	$32.10
$142,001 - $170,000	$284,001 - $340,000	$51.70
$171,001 - $499,999	$340,001 - $749,999	$71.30
More than $500,000	More than $750,000	$77.90

 

Married beneficiaries who lived with spouses any time during year who filed 2020 separate returns with MAGI -
Up to $91,000	$0.00
$91,001 - $408,999	$71.30
$409,000 or more	$77.90

ESTATE AND GIFT TAX

 

The annual gift tax exclusion is $16,000 per person.  The estate tax exemption, also known as the unified credit, is $12,060,000.

 

THE SHAFT

 

I am not talking about what the government gives taxpayers.  The “shaft tax” imposed on the first sale by the manufacturer, producer, or importer of any shaft of a type used in the manufacture of certain arrows is 55 cents per shaft.

 
If you have any questions about the information provided herein please consult your, or a, tax professional.