As we inch closer to the end of the year, there is no better time than now to start thinking about your 2022 tax return. There were big tax breaks in 2021 for individuals that you may have taken. However, due to lack of congressional action, many tax benefits have expired at the end of 2021 and will not be available for 2022. While there is still time for Congress to extend some or all of these provisions and make them retroactively available for 2022, which they have done in the past–at this point it seems unlikely. Here is a list to help you understand what expired and how they may affect you.

  • Child Tax Credit
    • Reverts back to $2,000 per child (from $3,000 per child)
    • Reduces the child age back to under 17 to qualify (from under 18)
    • Is no longer fully refundable
      • Reverts back to lower income phase-out
        • AGI over $75,000 for single filers
        • AGI over $112,500 for head of household filers
        • AGI over $150,000 for married filing joint filers
    • No monthly advance payments of the credit
  • Child & Dependent Care Tax Credit
    • Reverts back to 20% (from 50%)
    • Reverts back to very low AGI phase-out
      • At $15,000 it begins reducing from 35% to 20%
    • Lowers qualified expenses back to $3,000 for 1 child and $6,000 for 2 or more (from $8,000 and $16,000)
    • Credit is non-refundable
  • Earned Income Tax Credit (EITC)
    • Minimum age for childless worker back to 25 (from 19)
    • Maximum age limit back to 65 (from no limit)
    • Maximum credit for childless worker drops to $560 (from $1,502)
    • Expanded eligibility for former foster youth and homeless youth is dropped
    • Rule allowing you to use your 2019 earned income to calculate EITC if it boosted your credit amount is dropped
  • Charitable Gifts
    • The ability to deduct $300 for single and $600 for married filing joint without itemizing expires
    • Reverts back to 60% AGI limit (from 100%) on Schedule A if itemizing.
  • Miscellaneous changes
    • Ability to deduct premium mortgage insurance as mortgage interest has ended
    • Cafeteria plan deferrals for child care revert back to $5,000 (from $10,500)

Due to some of these changes, you may find in April of 2023 that you have a balance due, when you were expecting a refund.

Please call your tax advisor at KT for assistance in looking at the impact of these changes.