The pressure of finishing your taxes by April 15th has been softened as the federal tax filing deadline has been extended to May 18th for individual returns. Despite the few extra days, getting a jump on filing your taxes will help alleviate the stress that goes with this time of the year. If you really want to make life on yourself, the best approach is to leave it to the experts and taking advantage of all that TurboTax has to offer will make the entire process as painless as possible.
Not only is the world of tax regulations always changing, but life changes are happening just as frequently, meaning that you have to keep up with both. From job changes to life changes and how people earn a living as well as how you invest, those changes can seem too minor at the moment, but then they can be very impactful when it comes to tax time.
One of the most important things to determine when filing our taxes is what your situation. TurboTax will help you figure it out, whether you are just a single person with nothing out of the norm or if you are an investor, a homeowner, or self-employed, the list is fairly long and you want to get this part right make sure you are headed down the right filing path. Once you get going, you have the option of doing the work yourself or having one of the Turbotax experts do all the work for you.
Lisa Greene-Lewis of TurboTax was kind enough to share some of the key changes that she thinks that people should be aware of when filing their 2022 tax returns.
- The key changes tax filers should be aware of relate to provisions under the American Rescue Plan that either reverted to Pre-American Rescue Plan law or they went away as follows:
- Child Tax Credit: For tax year 2022, the Child Tax Credit reverts to:
- Reverts to up to $2,000 down from up to $3,600
- Each dependent child must be under age 17
- Refundable up to $1,400, but no longer fully refundable
- Advance payments were not issued for tax year 2022
- The credit is available if you earn up to $200,000 as single taxpayer or head of household (or up to $400,000 if you are a married couple filing jointly)
- Child and Dependent Care Credit: For tax year 2022, the Child and Dependent Care Credit adjusts to :
- Up to 35% of $3,000 ($1,050) of child care expenses for a dependent child under 13, an incapacitated spouse or parent, or another dependent so that you can work or look for work. If you have two or more dependents, the credit will be up to 35% of $6,000 in expenses ($2,100) down from up to $8,000 for two or more kids, and up to $4,000 for one child
- The credit will be reduced at incomes over $15,000
- Earned Income Tax Credit
- Age requirements if you can claim Earned Income Tax Credit with no kids are back. Taxpayers with no kids have to be 25 or under 65 to claim the credit.
- Previous year income cannot be used to help you qualify for Earned Income Tax Credit
- Note, the amount of Earned Income Tax Credit is adjusted for inflation every year and will be up to $6,935 with three or more kids in tax year 2022.
- Recovery Rebate Credit Not Available on 2022 Taxes
- If you were eligible for the third stimulus up to $1,400 for you or your dependent child(including adult dependents) and you didn’t receive your stimulus payment, you were able to claim the Recovery Rebate Credit on your 2021 taxes, but the Recovery Rebate Credit will not be available on your 2022 taxes.
- No Longer Claim Self-Employed Sick and Family Leave Credits for Tax Year 2022
- The American Rescue Plan extended refundable tax credits for sick leave and family leave through tax year 2021 for both eligible self-employed and small business owners, but the credit expires after tax year 2021.
- No Longer Deduct Cash Donations if Claiming Standard Deduction for Tax Year 2022
- If you are one of the close to 90% of taxpayers who can claim the standard deduction, you can no longer claim the deduction for cash donations up to $300 ($600 married filing jointly) for tax year 2022. If you can itemize your deductions you will still be able to claim your charitable deductions.
- 1099-K Forms
- This year is a transition period: On December 23, the IRS announced a delay in reporting thresholds and well known third-party settlement organizations (TPSOs) will not be required to report tax year 2022 transactions on a Form 1099-K to the IRS or the payee for the lower, over $600 threshold amount enacted as part of the American Rescue Plan of 2021. Per the IRS, this means that for tax year 2022 the existing 1099-K reporting threshold of over $20,000 in payments from over 200 transactions will remain in effect.
As more investors get involved with cryptocurrency, Lisa provided some insight on how they should be handling these type of investments.
“With the changing crypto environment many experienced crypto losses in 2022. People should be aware that they can offset losses on investments against any capital gains. Any net losses can be offset against ordinary income like wages up to $3,000, lowering your taxes. Any losses exceeding $3,000 can be carried forward to the next year. For those who traded crypto frequently, they don’t need to worry about putting each transaction in manually, TurboTax allows you to automatically import up to 20,000 crypto transactions at once. TurboTax will help surface and guide customers to use any unrealized capital losses they may have from prior years, improving their tax outcome and lowering taxes owed,” Lisa said.
“Whether you own a small business, you are selling on eBay, or you are renting out a property make sure you gather your expenses directly related to your business or your rental property as this will lower your taxable income. TurboTax can help self-employed uncover industry specific deductions using AI and machine learning or self-employed like eBay sellers can fully hand their taxes over to our TurboTax Live Full Service tax experts. TurboTax also helps landlords correctly report their rental income and expenses and accurately figures out depreciation. TurboTax also expanded to corporate small business returns with the launch of TurboTax Live Full Service Business Tax. Incorporated business owners with multi-member LLCs, S-corps, and partnerships are matched with and can fully hand their taxes off to a specialized tax expert experienced in the complexities of small business taxes.”
Finally, with unemployment seemingly always changing since Covid-19, Lisa provided some insight on this topic for 2022.
“Unemployment payments are reported on Form 1099-G which is taxable income reported on your tax return. In general, state and local income can also be taxable if it is related to a refunded tax that was deducted in the prior year and you received a benefit from the deduction. The IRS announced that special tax refunds or payments made by certain states related to the pandemic and its associated consequences in 2022 will not be not be taxable,” Lisa said. “If you receive a 1099-G for unemployment or payments from state or federal government, the IRS will also receive a copy and will be tracking for the income. If the incorrect amount is reported on your return the IRS may adjust your taxes when you file your taxes. If they make the adjustment, they will send you an adjustment letter notifying you of the changes.”
If you have thought about using some type of tax service and have struggled with your taxes in the past, there is no better time to let the experts give you a hand. TurboTax has a package for everyone and the prices vary you will find they are very affordable and for what they offer, the prices are an extremely great deal. Take the stress out of doing your taxes this year and make sure you get them done with 100% accuracy the one place that does all of that and more is TurboTax.
For more information, visit: TurboTax