The year is over, and it is almost time to start filing your 2022 taxes!
The IRS is gearing up for the 2022 tax season, and taxpayers are getting ready to begin the ordeal of filing their taxes. If you are one of those who file their taxes as early as possible, then the IRS issued a special warning for you. They are warning “early filers” to hold off on filing taxes due to changes in the tax code.
The IRS released a statement urging taxpayers to prepare for tax season by collecting documents and being aware of specific changes that will be reflected in the 2022 federal tax return.
Here are some of the most critical notices from the IRS. New rules and tax brackets will affect your 2022 Federal Tax Return.
Here’s what’s new and some key items for taxpayers to consider before they file next year.
Reporting Rules Changed for Form 1099-K
Due to new rules, a single transaction exceeding $600 can require the third-party platform to issue a 1099-K. Money received through third-party payment networks from friends and relatives as personal gifts or reimbursements for personal expenses is not taxable.
The IRS cautions people in this category who may be receiving a Form 1099 for the first time – especially “early filers” who typically file a tax return during January or early February – to be careful and make sure they have all of their key income documents before submitting a tax return.
Extra caution could save people additional time and effort in filing an amended tax return. And if they have untaxed income on a Form 1099 that isn’t reflected on the tax return they initially file, that could mean they need to submit a tax payment with an amended tax return.
If the information is incorrect on the 1099-K, taxpayers should contact the payer immediately, whose name appears in the upper left corner of the form. Unfortunately, the IRS cannot correct it.
Some Tax Credits Return to 2019 Levels
This means affected taxpayers will likely receive a significantly smaller refund than the previous tax year. Changes include amounts for the Child Tax Credit (CTC), Earned Income Tax Credit (EITC), and Child and Dependent Care Credit.
- Those who got $3,600 per dependent in 2021 for the CTC will, if eligible, get $2,000 for the 2022 tax year.
- For the EITC, eligible taxpayers with no children who received roughly $1,500 in 2021 will now get $500 in 2022.
- The Child and Dependent Care Credit returns to a maximum of $2,100 in 2022 instead of $8,000 in 2021.
No Above-the-Line Charitable Deductions
During COVID, taxpayers could take up to a $600 charitable donation tax deduction on their tax returns. However, in 2022, those who take a standard deduction may not take an above-the-line deduction for charitable donations.
More People May Be Eligible for the Premium Tax Credit
For the tax year 2022, taxpayers may still qualify for temporarily expanded eligibility for the premium tax credit.
Avoid Refund Delays and Understand Refund Timing
Many factors can affect a refund’s timing after the IRS receives a return. Although the IRS issues most refunds in less than 21 days, the IRS cautions taxpayers not to rely on obtaining a 2022 federal tax refund by a specific date, especially when making major purchases or paying bills.
In addition, some returns may require additional review and may take longer to process if IRS systems detect a possible error, the return is missing information, or there is suspected identity theft or fraud.
Also, the IRS cannot issue refunds for people claiming the EITC or Additional Child Tax Credit (ACTC) before mid-February. This is because the law requires the IRS to hold the entire refund – not just the portion associated with EITC or ACTC.
The Last Quarterly Payment for 2022 Is Due on January 17, 2023
Taxpayers may need to consider estimated or additional tax payments due to non-wage income from unemployment, self-employment, annuity income, or even digital assets.
The Tax Withholding Estimator on IRS.gov can help wage earners determine if they need to consider an additional tax payment to avoid an unexpected tax bill when they file.
Gather 2022 Tax Documents
Taxpayers should develop a recordkeeping system − electronic or paper − that keeps important information in one place.
This includes year-end income documents like Forms W-2 from employers, Forms 1099 from banks or other payers, Form 1099-K from third-party payment networks, Form 1099-NEC for nonemployee compensation, Form 1099-MISC for miscellaneous income, or Form 1099-INT if you were paid interest, as well as records documenting all digital asset transactions.
Ensuring their tax records are complete before filing helps taxpayers avoid errors that lead to processing delays. When they have all their documentation, taxpayers can file an accurate return and avoid processing or refund delays or IRS letters.
More From A Dime Saved:
- The IRS Just Adjusted Its Tax Income Brackets — Are You Ready?
- Americans Are Moving to These States in Droves To Save Money
- 10 Greatest Tips for Living as Cheap as Possible