As you prepare to file your 2022 taxes, check into some of this tax season’s updated deductions. It’s common to miss out on deductions or opportunities you could take. Or your tax professional missed or wasn’t aware you could deduct. Spend some time today reading these 2023 tax season planning tips.
Some common deductions could be incorrect payroll deductions on W-2s, missed deductions for college savings plans. In addition, long-term care premiums (if they exceed 7.5% of your adjusted gross income), and health insurance if you’re self-employed. Or, from your investments, you may have carry-forward losses from 2022. Which may off-set the increases from some of your other investments. Here are a few specific items for the 2022 tax filing season that may impact you:
Expanded child tax credits
2022 is the last year to take advantage of The American Rescue Plan. The plan increased the 2022 child tax credit for eligible families with children under age 6 to $3600 per child and $3,000 for families with kids ages 6 to 17. To qualify for the full credit, single filers need a modified adjusted gross income of less than $200,000. While married couples filing together must earn under $400,000.
Taxpayers that made charitable donations in 2022 may take advantage of a write-off for charitable gifts but they’ll need to itemize deductions on their federal tax return. For 2022, single filers may claim donations up to $12,950. Head of household filers may claim up to $19,400, and married couples may get up to $25,900.
In addtion, filers may deduct 60% of AGI for contributions of cash. Contribution amounts over deduction limits may be carried over up to five subsequent tax years. Your tax professional can help clarify how to maximize your deduction limits with carryover if you intend to use charitable deductions as part of your giving strategy to help minimize taxes. In conclusion, work with your financial and tax professionals for tax planning strategies for 2022 and future years.
Health insurance premium subsidies
In March 2021, Congress increased subsidies to help make health insurance more affordable for Americans. For 2022 the income cap for subsidy eligibility was eliminated, but will not be for 2023 forward. However, premium subsidies will capped at 8.5% of household income for 2023 through 2025 for individuals meeting the income level threshold.
Required Minimum Distributions (RMDs)
The Securing a Strong Retirement Act of 2022 extends the start of RMDs beyond age 72 on a gradual basis:
- For those who turn age 72 after December 31, 2022, and age 73 before January 1st, 2030, the RMD age would be 73.
- For those who turn age 73 after December 31, 2029, and age 74 before January 1st, 2033, the RMD age would be 74.
- And for those who turn age 74 after December 31, 2032, the RMD age would be 75.
RMD rules apply to the original owner’s age of a traditional IRA, SIMPLE IRA, SEP-IRA, a 401(k), or 403(b). Roth IRAs do not have RMDs.
Work with your financial and tax professionals regarding your investments and review deductions to help determine how they may impact your 2022 tax situation. Now is a great time for us to meet and plan for 2023 to help determine tax-saving strategies to help you prepare for next year’s tax season.
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