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Hello! Thank you for your support, referrals, and for choosing Brett Hersh EA LLC, RealEstate-TaxPro.com & Overnight Accountant. Both tax season and teaching season have ended, so we have a little time to help you prepare for 2022.
It's been both an exciting and frustrating year tax-wise. On the one hand, special 2021 credit bumps created a windfall for some clients. But, on the other hand, stimulus payments and advance child tax credit payments received months before were easy to forget. This created a mess for those who reported incorrect amounts. Additionally, paying 1/2 of the child tax credit in advance caused some clients who generally receive a refund to owe tax on their return.
In today's newsletter, I'll share significant changes impacting your 2022 tax return, especially compared to 2021. In upcoming editions, I'll share credits designed to reduce the cost of many energy-efficient home improvements and the purchase of electric vehicles.
Before we dig in, allow me a moment to remind you to download your 2022/2023 $50 Tax Prep Coupon. Also - please keep us in mind if you know anyone who needs assistance with their 2022 return. To this end, here's a link to a $100 New Client Coupon we hope you will share with them!
Quick Links to Newsletter Topics
- 2022 Reversions and Expirations
- Business - 100% Bonus Depreciation Ends
- Business - 100% Meal Deduction Ends
- Child Tax Credit Reduced for 2022
- Child & Dependent Care Credit Reduced for 2022
- Inflation Adjustments for 2022
- Tax Bracket Increase for 2022
- Standard Deduction Increase for 2022
- Retirement Contribution Increases 2022 & 2023
- Social Security Benefit Increases 2022 & 2023
- Health Insurance Credit Changes 2022 - 2025
Thus far, overarching changes to the tax code have been avoided in 2022 - likely because it’s an election year. The most impactful changes for 2022 relate to the expiration of changes and the rising cost of living. Several COVID-related business deductions and credit enhancements expired at the end of 2021. Others will disappear at the end of 2022. Mandatory inflation adjustments increased 2022’s marginal tax brackets, the standard deduction, retirement contribution limits, and – although it’s not tax-related – social security benefits.
Although the year did not see sweeping tax legislation, the Inflation Reduction Act (signed into law on August 16th, 2022) made some noteworthy changes that may impact your taxes and planning. Although it has little to do with inflation reduction, it does extend a COVID-related health insurance subsidy provision and increase incentives related to energy-efficient home improvements and purchasing an electric vehicle.
Business-wise the Inflation Reduction Act imposes a 1% excise tax on corporate stock buybacks and a corporate minimum tax rate of 15% for businesses with average annual “net incomes” over $1 billion. Although touted as a measure to ensure large corporations pay their fair share, – in reality, the minimum tax is more of a timing change. Once paid, companies receive a credit to offset future assessments.
I found one aspect of the Inflation Reduction Act fascinating, considering gas prices and the US’s shortage of refinery capacity. The act reinstates a long-dead petroleum excise tax on crude oil received at a US refinery (paid by the refinery’s operator) and on petroleum products entering the US for consumption, use, or warehousing. The excise tax originally expired in 1995. The tax is 16.4 cents per barrel, adjusted for inflation.
Corporate excise taxes may pose attractive tax-pro reading, but you're not here for that. Let’s focus on changes that will impact your tax return.
|Tax Rate||For Single Filers||For Married Individuals Filing Joint Returns||For Heads of Households|
|10%||$0 to $10,275||$0 to $20,550||$0 to $14,650|
|12%||$10,276 to $41,775||$20,551 to $83,550||$14,651 to $55,900|
|22%||$41,776 to $89,075||$83,551 to $178,150||$55,901 to $89,050|
|24%||$89,076 to $170,050||$178,151 to $340,100||$89,051 to $170,050|
|32%||$170,051 to $215,950||$340,101 to $431,900||$170,051 to $215,950|
|35%||$215,951 to $539,900||$431,901 to $647,850||$215,951 to $539,900|
|37%||$539,901 or more||$647,851or more||$539,901 or more|
All courses and articles are for informational purposes only and do not constitute tax advice. Taxes are complicated - do not act on course information without consulting a professional. Always refer to treasury regulation before making any tax decision. Read the full disclaimer.
Great course!- Donna L, Phoenix, AZ, 1099-NEC & 1099-MISC Course (Training Edition) Course
This course package is thorough and will give you a solid handle on how to optimize your business expenses to minimize your taxes and keep appropriate records to handle any IRS challenges. Only want to dive into a particular topic? Jump to that video and scan forward to where your issue is addressed. Or watch the whole series to learn it all!- Josh, Charles Town, WV, Real Estate Agent Tax-Cut Library, Agent Edition Course
The course did meet my needs and clarified several fine points that the IRS instructions did not make clear to my brain.- Joe, VT, 1120-H Basics Course
The course was excruciatingly detailed, which I appreciate. I definitely recommend this course to anyone who even thinks they may need it.- Greg, Brookfield, IL, 1099-MISC Basics (Training Edition) Course
The course was excruciatingly detailed, which I appreciate. I definitely recommend this course to anyone who even thinks they may need it.- Greg, Brookfield, IL, 1099-MISC Basics Course