As pandemic relief measures — including enhanced tax credits — expire, some people could be in for a surprise when they file their federal returns for the 2022 tax year.
“Refunds may be smaller in 2023,” the IRS said in a November press release. Besides the end of stimulus payments, changes to the 2022 tax season include the return of some tax credits to pre-pandemic levels as well as less-generous deductions for charitable gifts.
Key takeaway: As you gather your paperwork and prepare to file your federal return, you’ll want to keep in mind some key tax changes for 2022.
Some tax credits take a hit
The $1.9 trillion American Rescue Plan Act of 2021 enhanced several tax credits that have now reverted to pre-pandemic levels. Tax credits can cut your income tax liability on a dollar-for-dollar basis.
Reduced tax credits
- Child tax credit. Taxpayers who got $3,600 per dependent in 2021 will, if eligible, get $2,000 for the 2022 tax year.
- Child and dependent care credit. This tax credit returns to a maximum of $2,100. Last year the maximum was $8,000.
- Earned income tax credit. Eligible taxpayers with no children who received about $1,500 in 2021 will get $500 in 2022.
What are the major tax changes for 2022?
To account for inflation, the IRS has increased the standard deductions for the 2022 tax year. Note that if you take the standard deduction, you won’t be able to claim itemized write-offs for charitable contributions.
What you need to know
- Standard deductions rise: For 2022, the standard deduction for married couples filing jointly was raised to $25,900 (that’s up $800 from 2021). For heads of household, it went up to $19,400 (an increase of $600). And for single filers and those who are married and filing separately, it increased to $12,950 (up $400).
- Tax break ends. During the pandemic, single taxpayers could claim up to $300 for cash donations, and married couples filing jointly could claim up to $600. But in 2022, filers who take a standard deduction may not take an above-the-line deduction for charitable donations. If you want to write off charitable donations, you’ll have to itemize your deductions.
Filing your federal return: When are taxes due in 2023?
Tax Day for 2023 has been pushed to Tuesday, April 18, because April 15 (the usual tax day) is a Saturday and the following Monday is Emancipation Day in Washington, D.C.
Tax tips: What you can do
- Open a bank account. The IRS says the fastest way to get a tax refund is to have the IRS electronically deposit it into your account. To open an account, you’ll need a government-issued ID, a few pieces of personal information and money to put in the account. A Credit Karma Money™ Spend online checking account is free to open.
- Reach out for help. The federal Volunteer Income Tax Assistance program is designed to help low- to moderate-income taxpayers file their federal income tax returns. If you make $60,000 or less, or meet certain qualifications, IRS-certified volunteers will assist you for free in preparing your tax return.
- Look for free options. Check IRS.gov to see if you qualify for the Free File program. IRS Free File is open to taxpayers whose adjusted gross income in 2022 was $73,000 or less.