2022 TAX YEAR: NEW TAX UPDATES AND DEADLINES

Dec 28

Written By Brian Soto

Tax season is right around the corner and I’d like to provide you some important information for 2022 tax year.

All current and new clients will receive next steps in January to onboard for our 2022 tax preparation service.
In the meantime, please prepare and gather your tax documents to be uploaded to our portal. Click Here for a 2022 list of tax documents to gather/prepare.

Rule changes related to the form 1099-K have been delayed and expected to be applied to 2023 tax year. The rule change was expected to decrease the reporting threshold from $20,000 to $600 for any business or individual generating income from third party payment systems (i.e. paypal, venmo, shopify, square, etc). This rule change does not apply to 2022 tax year. I wanted to point this out in case you were receiving conflicting information. Regardless, this new rule doesn’t change the taxability of business income. All income generated for business purposes is taxable regardless of a 1099-K.

Changes apply to the Child Tax Credit (CTC), Earned Income Tax Credit (EITC) and Child and Dependent Care Credit. This means that affected taxpayers will likely receive a significantly smaller refund compared to the previous tax year (2021).

Those who received $3,600 per dependent in 2021 for the CTC will, if eligible, receive $2,000 for the 2022 tax year.
For the EITC, eligible taxpayers with no children who received roughly $1,500 in 2021 will now receive $500 in 2022.
The Child and Dependent Care Credit returns to a maximum of $2,100 in 2022 instead of $8,000 in 2021.

During COVID, taxpayers could take up to a $600 charitable donation tax deduction on their tax returns without the need to itemize. However, in 2022, those who take a standard deduction may no longer take an above-the-line deduction for charitable donations. Those who itemize can still, as always, deduct charitable donations.

Although the IRS issues most refunds in less than 21 days, the IRS cautions taxpayers not to rely on receiving a 2022 federal tax refund by a certain date. Some returns may require additional review and may take longer to process if IRS systems detect a possible error, the return is missing information or there is suspected identity theft or fraud.
The IRS cannot issue refunds for people claiming the EITC or Additional Child Tax Credit (ACTC) before mid-February. The law requires the IRS to hold the entire refund – not just the portion associated with EITC or ACTC.

Please strongly consider creating an IRS Online Account to securely access your personal tax information, including tax return transcripts, payment history, certain notices, prior year adjusted gross income and power of attorney information. This also prevents any fraudulent parties from creating one for you.

Contribute the maximum to your retirement and/or HSA accounts – see here for 2022 limits
Purchase electric vehicle for EV Credit (up to $7,500 credit)
Sell poor-performing stocks to claim capital losses and offset your capital gains
If you itemize, charitable donations provide a direct dollar-for-dollar deduction

Consider delaying receiving income payments to claim in 2023 instead of 2022
Consider paying for expenses in 2022 that would otherwise be paid for in 2023 (i.e. book business travel early, purchase property supplies such as ice salt and shovels now, prepay insurance)

Remember that the penalties and interest the IRS charges depend on how much you owe and how late you are, but you can minimize the damage by making estimated tax payments and ensuring the tax owed is paid in full by the applicable tax deadline.
If you’re not sure of how much you should pay in estimated taxes this year and you don't want to pay the wrong amount by accident, you can choose to pay 90% of your estimated current year tax bill or 100% of your prior year tax bill. This generally avoids needing to pay an underpayment penalty.

Individual Filers - including employees, retirees, self-employed individuals, independent contractors, and single-member LLCs (Form 1040)

January 16, 2023 - 4th Quarter 2022 estimated tax payment due.
January 31, 2023 - Due date for employers to send W-2 and 1099 forms.
April 18, 2023 - Tax Day. Final day to submit tax returns, request extensions, and make IRA and HSA contributions for 2022 tax year.

Businesses - Partnerships (Form 1065), C Corps (Form 1120), and S Corps (Form 1120S)

January 16, 2023 - 4th Quarter 2022 estimated tax payment due
January 31, 2023 – Provide 1099NEC forms to contractors and W-2 forms to employees.
March 15, 2023 - Taxes for partnerships, multi-member LLCs, and S-Corporations are due.
April 18, 2023 - Taxes for C-Corporations are due.

As always, feel free to reach out to us by email or give our office a call if you have any questions.

We look forward to serving you.

Brian Soto

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