Journal of Accountancy Filing Season Quick Guide Tax Year 2022
Key tax and retirement provisions in the Secure 2.0 Act
2022: Child Tax Credit reverts to 2020 calculation $2,000 per kid (2021 was $3,000, $3,600 if <6) Non-refundable beyond $1,500 (2021 was Fully refundable) < 17 at end of year (2021 was <18) Dependent Care Credit also reverts to $3,000/$6,000 of expenses and back to 20% with lower phaseout
IR-2023-12, January 24, 2023 What is a digital asset?
IR-2022-234, December 29, 2022 - Beginning on January 1, 2023, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be: 65.5 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.
IR-2022-226, December 23, 2022 — A delay in reporting thresholds for third-party settlement organizations set to take effect for the upcoming tax filing season.
IR-2022-225, December 22, 2022 frequently asked questions (FAQs) about energy efficient home improvements and residential clean energy property credits in Fact Sheet FS-2022-40
Inflation Reduction Act:
Nonbusiness Energy Credits-Sec. 13301
Most residential energy credits (IRC Sec. 25C) like insulation, windows, doors and energy efficient furnaces are extended through the end of 2032 instead of expiring at the end of 2021.
Residential Clean Energy-Sec. 13302
The 2022-2032 home solar/wind credit (IRC Sec. 25D)has been increased back to 30% for 2022 and extended for 10 years at that rate.
Clean Vehicles or Electric Car Credit-Sec. 13401
The $7,500 maximum credit is back, but only if certain US component thresholds are met. According to the Congressional Budget Office only 30% of electric vehicles would qualify under the stringent thresholds of US material component requirements.
Used Electric Vehicles-Sec. 13402
A new credit equal to 30% (max $4,000) would apply for buyers of electric vehicles that are more than 2 years old. It must be bought from a dealer and be the 1st resale.
Qualified Refueling Property Credit-Sec. 13404
The alternative energy refueling station (or home electric car charger) credit was extended through 2032.
At the end of 2021 many existing tax rules expired. Here is a special list of things that have already expired and that are no longer in effect for 2022.
Selected Expired Individual Tax Items:
• The 1 year only increase in the child credit expired at the end of 2021. This credit reverted back to $2,000 (from $3,000); reduced the age back to under 17 (from under 18); is no longer fully refundable ($1,400 max); and reverts back to lower income phaseouts.
• The 1 year only increase in the dependent care credit also expired at the end of 2021. It reverts back to 20% (from 50%); reverts back to a very low AGI phaseout (at $15,000 it begins reducing from 35% to 20%); and lowers qualified expenses back to $3,000 for 1 child ($6,000 for >1) from the one year only amounts of $8,000 and $16,000.
• The $600 non-itemizer charitable deduction amount expired at the end of 2021.
• The 2021 increases to the earned income credit for taxpayers without children and for older and younger Americans reverts back to 2020 rules.
• The 100% of AGI charity deduction for cash contributions reverted back to a 60% limit.
• The credits for nonbusiness energy property (insulation, storm windows and doors, etc.) and alternative fuel refueling (electric car chargers) expired at the end of 2021.
• The deduction for mortgage insurance premiums as mortgage interest expired at the end of 2021.
• Required minimum distributions returned for taxpayers 72 and over 72 after 2018.
• Cafeteria plan deferrals for child care revert back to $5,000 from $10,500.
Selected Expired Business Tax Items:
• Full expensing of R&D costs changes from 2021 to a 5 year amortizing asset deduction in 2022.
• The business interest expense deduction goes from 30% of EBITDA in 2021 to 30% of EBIT in 2022.
• The 1099-K reporting threshold of $20,000 for 2021 has been dropped to $600 for 2022.
• The Employee Retention Credit for all businesses, including startups, expired at the end of 2021, although it may still be claimed on amended 941’s for 2021 and 2020.
• The 3-year recovery period for racehorses two years old or younger also reverted back to 7 years for 2022
22-07-11 The Maryland State Department of Assessments and Taxation (SDAT) today announced that HB268, which raises the exemption from personal property assessment for all Maryland businesses from $2,500 to $20,000, has taken effect. HB268 took effect on June 1, 2022, and is effective for tax years starting after June 30, 2022, and includes annual filings submitted as early as January 2022. SDAT will automatically adjust assessments of filings that were submitted between January 1, 2022, and June 30, 2022 so that reported business personal property less than $20,000 is not assessed.
Late filing penalties previously billed on 2022 business personal property returns reporting less than $20,000 have been abated and filers who have already paid a late filing penalty billed on a return filing reporting less than $20,000 are being mailed a refund check for the penalty paid.
Beginning in 2023, filers with a total original cost of personal property less than $20,000 will also be able to self-attest on their Annual Report that their personal property falls within the exemption range and will no longer be required to submit a return detailing their personal property.
IR-2022-124, June 9, 2022 Standard mileage rate for business travel will be 62.5 cents per mile. For the final 6 months of 2022, the standard mileage rate for business travel will be 62.5 cents per mile, up 4 cents from the rate effective at the start of the year. The new rate for deductible medical or moving expenses (available for active-duty members of the military) will be 22 cents for the remainder of 2022, up 4 cents from the rate effective at the start of 2022. These new rates become effective July 1, 2022.
22-04-01 Maryland Tax Bills Signed Retirement Income Subtraction, Work Opportunity Credit, and Sales Tax Exemption on Baby & Oral Hygiene Products
The Retirement Tax Elimination Act creates a nonrefundable tax credit that offsets Maryland state income tax for a resident who are 65 years of age or older and whose federal adjusted gross income (AGI) does not exceed $150,000 for a joint filer, or $100,000 for a single filer.
IR-2022-38, February 16, 2022 - Partnerships preparing K-2 & k-3 Forms
IR-2021-251, December 17, 2021 — 2022 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.
IR-2021-225, November 16, 2021 — Clarification how the temporary 100% business deduction for food or beverages from restaurants applies to taxpayers properly applying the rules of Revenue Procedure 2019-48 for using per diem rates.
IR-2021-216, November 4, 2021 — The amount individuals can contribute to their 401(k) plans in 2022 has increased to $20,500, up from $19,500 for 2021 and 2020.
IR-2021-113, May 17, 2021 — The first monthly payment of the expanded and newly-advanceable Child Tax Credit (CTC) from the American Rescue Plan will be made on July 15.
IR-2021-111, May 14, 2021 — The Internal Revenue Service will begin issuing refunds this week to eligible taxpayers who paid taxes on 2020 unemployment compensation that the recently-enacted American Rescue Plan later excluded from taxable income.
IR-2021-106, May 11, 2021 — The Internal Revenue Service today provided an overview of some of the key tax provisions in the American Rescue Plan Act.
IR-2021-59, March 17, 2021 Individuals for the 2020 tax year will be automatically extended from April 15, 2021, to May 17, 2021.
March 11, 2021 Maryland Tax Relief Alert Extension of Time to File and Waiver of Interest and Penalty for Certain Filers
Maryland Tax Relief Act was passed February 15, 2021 that affects your 2020 tax return.
Maryland announced new filing deadlines for 1st Quarter. They are now due April 15, 2021 for many taxes.
Maryland - What's New for your 2020 Tax Return
The Consolidated Appropriations Act, 2021, H.R. 133 was signed Dec 27, 2020 with updated tax law changes.
IR-2019-158, September 24, 2019 Safe harbor rental real estate to be treated as a trade or business
IR-2019-156, September 13, 2019 section 168(k) 100% additional first year depreciation deduction
IRS finalizes regulations for 100 percent bonus depreciation
IR-2020-216, September 21, 2020 — The Treasury Department and the Internal Revenue Service today released the last set of final regulations implementing the 100% additional first year depreciation deduction that allows businesses to write off the cost of most depreciable business assets in the year they are placed in service by the business.
IR-2019-57, March 26, 2019 Plug-in electric vehicle tax credit begins phase down April 1, 2019
IR-2019-14, February 13, 2019 Safe harbor method for determining depreciation deductions for passenger automobiles that qualify for the 100-percent additional first year depreciation deduction
IR-2019-04, January 18, 2019 Final regulations and guidance, implementing the new qualified business income (QBI) deduction (section 199A deduction).
2019 IRS Publication 5307 Tax Reform Basics for Individuals and Families
Tax Cuts and Jobs Act aka H.R.1
2018 Capital Gains & Qualified Dividends
2018 AMT Exemptions
2018 Mortgage Interest & Taxes Paid
2018 Child Tax Credit & New Family Credit
2018 Deduction for Qualified Business Income
Section 529 Qualified Tuition Programs - 529 plans can allow distributions of up to $10,000 per-student to pay tuition expenses for a public, private, or religious elementary or secondary school. post secondary rules remain unchanged.
Entertainment Expenses - No deduction is allowed to an activity considered to be entertainment, amusement or recreation. No deduction is allowed for membership dues to any club organized for business, pleasure, recreation or other social purpose or a facility used in connection with the above. IR-2018-195 IRS issues guidance on business expense deductions for meals, entertainment
IRS issues final regulations on the deduction for meals and entertainment
IR-2020-225, September 30, 2020 — The Internal Revenue Service issued final regulations on the business expense deduction for meals and entertainment following changes made by the Tax Cuts and Jobs Act (TCJA).
Moving Expenses - Moving expenses deduction and exclusion from income provision is allowed only the members of the Armed Forces on active duty that move pursuant to a military order and incident to a permanent change of station until 2025.
Bicycle Commuting Reimbursement Exclusion - Any employer reimbursement are taxable to the employee.
Casualty Loss - A personal casualty loss is deductible only if such loss is attributable to a Federally Declared Disaster Area declared by the President until 2025.
Itemized Deduction Phase-out - The phase-out of itemized deductions provision has been suspended until 2025.
Kiddie Tax - The parent's tax rate is no longer used to calculate kiddie tax. Net unearned income in excess of $2,100 is now taxed according to the tax brackets applicable to trusts and estates until 2025.
Section 179 Expense Deduction - Maximum amount is $1,000,000
2018 standard Mileage Rates
Charitable Contributions - the taxpayer must obtain a contemporaneous written acknowledgement for any contribution of $250 or more. In 2018, the percentage of AGI limitation for charitable contributions increased from 50% to 60%. No charitable deduction is allowed for payment to a higher education institution in exchange for which the taxpayer receives the right to purchase tickets or seating to an athletic event.
Medical Expenses - The threshold for deducting medical expenses increases to 10% for all taxpayers until 2025.
Alimony - Alimony is no longer deductible by taxpayer spouse and includible in income by the recipient spouse. This rule only applies for divorce or separation instruments executed after December 31, 2018, and instruments executed on or before December 31, 2018 but modified after that date to include these new provisions.
Some Refunds Delayed
The IRS wants taxpayers to be aware of several factors that could affect the timing of their tax refunds next year. Due to a December 2015 law, the IRS cannot issue refunds on tax returns claiming the Earned Income Tax Credit or the Additional Child Tax Credit before mid-February. Under the change required by Congress in the Protecting Americans from Tax Hikes Act, the IRS must hold the entire refund – even the portion not associated with the EITC and ACTC. This law change, which went into effect in 2017, helps ensure that taxpayers get the refund they are owed by giving the IRS more time to help detect and prevent fraud. EITC/ACTC-related refunds should be available by first week of March
IRS Private Debt Collection
The IRS began a new private collection program of certain overdue federal tax debts selecting four contractors to implement it. The IRS will always notify a taxpayer before transferring their account to a private collection agency (PCA). First, the IRS will send a letter to the taxpayer and their tax representative informing them that their account is being assigned to a PCA and giving the name and contact information for the PCA. This mailing will include a copy of Publication 4518, What You Can Expect When the IRS Assigns Your Account to a Private Collection Agency. Only four private groups are participating in this program: CBE Group of Cedar Falls, Iowa; Conserve of Fairport, N.Y.; Performant of Livermore, Calif.; and Pioneer of Horseheads, N.Y. The taxpayer’s account will only be assigned to one of these agencies, never to all four. No other private group is authorized to represent the IRS. Note: Check your account balance. If nothing is due, you typically wouldn’t be contacted by IRS or a private firm.
IR-2017-70, March 30, 2017 For Small Business Startups, New Option for Claiming Research Credit; Option Still Available for Those That Already Filed Notice 2017-23, provides guidance on a new provision included in the Protecting Americans From Tax Hikes (PATH) Act enacted in December 2015. This new option will be available for the first time to any eligible small business filing its 2016 federal income tax return this tax season. Those who already filed still have time to choose this option.
Tax Preparedness Series: Tax Records — What to Keep
IR-2016-162, Dec. 6, 2016 — As tax filing season approaches, the IRS has information for taxpayers who wonder how long to keep tax returns and other documents.
The Protecting Americans from Tax Hikes Act of 2015 (the PATH Act), was enacted on December 18, 2015. The PATH Act contains several changes to the tax law that affect individuals, families, businesses and help safeguard against tax fraud.
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