February Blog
With tax season quickly approaching, it’s important to know about the deadlines, new economic relief measures, deductions, and tax brackets. Continue reading for what you need to know about the 2022 tax season.
Deadlines:
The tax deadline for all federal tax returns and payments is April 18th, 2022.
Standard deductions:
For single filers, the standard deduction is $12,950.
For married couples filing jointly, the standard deduction is $25,900.
For married couples filing separately, the standard deduction is $12,950.
For heads of households, the standard deduction is $19,400.
Income tax brackets:
The income tax brackets for the 2022 tax season have been increased due to inflation. Below are the tax rates:
- 12%: single filers, $10,275; joint filers, $20,550
- 22%: single filers, $41,775; joint filers, $83,550
- 24%: single filers, $89,075; joint filers, $178,150
- 32%: single filers, $170,050; joint filers, $340,100
- 35%: single filers, $215,950; joint filers, $431,900
- 37%: single filers, $539,900; joint filers, $647,850
Tax Deductions and Tax Credits
Both tax deductions and tax credits are your friends during tax season. Tax deductions help lower your taxable incomes while tax credits are amounts that can be subtracted from your tax bill.
- Charitable Deductions
If you’re taking the standard deduction, you can claim any above-the-line deductions of up to $300 for single filers and $600 for married & joint filers for charitable contributions made in cash.
If you’re itemizing your deductions, you’ll be able to deduct up to 100% of your adjusted gross income in qualified charitable donations.
- Medical Expenses Deductions
You can deduct any medical expenses that are above 7.5% of your adjusted gross income. To be able to do this, you must itemize your deductions.
- Child Tax Credit
The American Rescue Plan increased the Child Tax Credit from $2,000 to $3,600 for every child under the age of 6 and to $3,000 for every child between the ages of 6 and 17. The IRS began to send checks with a portion of the credit through monthly payments which broke down to $300 a month for each child under 6 and $250 for each child between 6 and 17. The tax credit then phased out for people with income exceeding $150,000 for married people filing jointly and $112,500 for heads of households. Keep in mind that receiving the monthly checks will lower what you receive at tax time.
- Education Credits
If yourself or your dependent child is going to college, you could receive the American Opportunity Tax Credit. It is a partially refundable credit for educational expenses. You can claim up to $2,500 per student. If the credit brings your tax liability to zero, 40% will be refunded to you.
The Lifetime Learning Credit is non-refundable and can cover up to $2,000 in qualified educational expenses. While the AOTC can be used for only undergraduate expenses, the LLC can be used for all different types of educational opportunities.
If you are having trouble figuring out your taxes, contact us at Total Clarity Wealth Management. We will be able to sit down with you and help you have the best tax outcome possible. Give us a call today to get a head start!
Information in this material is for general information only and not intended as investment, tax or legal advice. Please consult the appropriate professionals for specific information regarding your individual situation prior to making any financial decision. No strategy assures success or protects against loss. Investing involves risk including loss of principal.
LPL Financial Representatives offer access to Trust Services through The Private Trust Company N.A., an affiliate of LPL Financial.
Sources:
https://www.ramseysolutions.com/taxes/tax-season-what-you-need-to-know
https://www.taxoutreach.org/blog/what-you-need-to-know-to-file-taxes-in-2022/
