5 IRS changes you need to know about this year

With the tax filing deadline fast approaching, the changes made by the IRS are under scrutiny. Here’s a list of new information on tax caps, standard deductions, benefits, and more.

standard deduction

The standard deduction amount has been increased for the 2022 tax year. The standard deduction refers to a fixed amount that the IRS allows withholding agents to deduct from their taxes.

For tax year 2022, single applicants (as well as married couples filing separately) receive a standard deduction of $12,950, up $400 from the previous year. Those who are married and file jointly can receive the standard deduction of $25,900, up $800. Heads of Household receive a standard deduction of $19,400, up $600.

Marginal tax rates

The IRS has slightly changed tax brackets for the 2022 tax year. Contrary to the Biden administration’s claims that the rich will pay more, they have actually raised income limits for many of their tax brackets, leaving them in lower tax brackets. The maximum tax rate of 37 percent now applies to individual taxpayers with incomes above $539,900, up from $523,600 in the previous tax year 2021. For couples filing jointly, the threshold has been raised from $628,300 to $647,850.

The lowest 10 percent tax applies to those earning $10,275 or less for single registrars, down from $9,950 last year. For the 22 percent group, the limit was increased from $40,525 to $41,775. For the 24 percent group, the limit has gone up from $86,375 to $89,075. The limits for 12%, 32% and 37% groups have also been raised.

Child tax credit

Congress raised the Child Tax Credit (CTC) in 2021 but did not renew it in 2022. In tax year 2021, parents with children age five and under received $3,600 CTC per child, with children age six and older. and 17 with $3,000 net CTC. In tax year 2022, all children under the age of 17, regardless of age, only receive $2,000 CTC.

Earned Income Tax Credit (EITC)

The EITC applies to low and middle income workers. The maximum loan amount for tax year 2021 was between $1,520 and $6,728. For tax year 2022, this amount was changed to $560 to $6,935.

The loan amount depends on the income level, registration status and the number of children of the applicant. The maximum earned income limit for co-applicants with more than three children has been raised from $57,414 to $59,187.

Property tax, gifts

In the 2021 tax year, the estate of 2021 deceased heirs had a base exemption of $11.7 million. In tax year 2022, this amount was increased to $12.06 million. The annual gift discount has been increased from $15,000 in calendar year 2021 to $16,000 in calendar year 2022.

The tax year 2022 filing deadline is April 18, 2023.

For the 2023 tax year, which is due in 2024, the IRS once again raised the standard deduction limits, expanded the tax brackets by about 7 percent, and also increased the EITC credit limit.

– Telegraph services