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What we know so far...
Child Tax Credit and Dependent Care Credit
Unlike 2021 these credits will not be as impressive. The Child Tax Credit for 2022 has reverted back to $2,000 per dependent under age 16. For 2022, the Dependent Care Credit will reduce back to a maximum credit of $1,050 for one dependent and $2,100 for two or more dependents
EIC
Just like the child credits, the Earned Income Credit is reverting back as well. If you found yourself a recipient of this credit in 2021 but had not been a recipient in the past, do not look for a repeat of that credit for 2022. To learn more about the changes to this credit or to determine if you are eligible, click below to see the IRS website for details.
2022 Changes
In 2021 many tax changes created a tax credit windfall. Stimulus checks on multiple occasions; one-time refundable child credits; incredible one-time increases in dependent care credits; tax-free unemployment; health care credits on the Marketplace unlike any other year; a mortgage insurance premium deduction; 100% charitable contribution deductions; a one year only expansion of the earned income credit; a $600 charity deduction for non-itemizers. All of these credits combined resulted in many tax payers seeing refunds or dramatically lowered tax bills but they are all gone for 2022.
Did you receive one?
With new reporting requirements being placed in service many taxpayers will receive a 1099K to be included with their 2022 tax information. These forms are not spam, so be sure to not discard them. If you receive a 1099K be proactive to help with a more seamless preparation by gathering a list of expenses to accompany the funds claimed on these forms. They will come from places like Ebay, Facebook Marketplace, Zelle, Venmo, Cash App, etc. While we understand that a lot of clients use these avenues to send/receive monies with friends/family the IRS is going to be looking for them as a way to tax you on extra income. This is why having a detailed list of expenses ready to submit with your tax return is paramount. **Click the link below for a preview of what this form looks like.**
Not new, more like a reminder.
When gathering your tax documents do not forget about those Cryto transactions that you may have done during the year. If you have sold currency, a large help for us, is to export to excel a spreadsheet of those sales to include purchase date, sale date, Cryto type/name, number of shares, cost basis, and sales price (does not have to be listed in this specific order). Many financial institutions holding these funds send statements electronically so do not forget to include yours.
Just a reminder of the basics.
Here is a list of the basic forms/items to remember to include with your tax information. (Not all items pertain to all clients)
Click the links below for blank Schedule C & E forms to help with gathering income and expenses.
We want to know your needs exactly so that we can provide the perfect solution. Let us know what you want and we’ll do our best to help.
Thompson Accounting & Business Solutions