Tax Information for Professionals

2023 FILING SEASON CHANGES FOR 2022 TAX RETURNS

Due Date for 2022 Returns Increased Standard Deduction Personal Exemption Tax Rates Itemized Deduction Limits AMT Exemption HSA Contribution Limits Child Tax Credit Child & Dependent Care Tax Credit Clean Vehicle Credit No Recovery Rebate Credit No Charitable Deduction For Non-Itemizers Earned Income Tax Credit (EITC) Educator Expenses/Deduction Unemployment Exclusion Charitable Contributions Forgiven Student Loan Debt Gift Tax Exclusion Education Tax Benefits Premium Tax Credit 1099-K Forms

Welcome to On-Line Taxes Inc. Pro software. With our intuitive, user friendly software program, you will be able to file federal and state tax returns with the click of a button. You will also have:

A team of highly trained and attentive support system members, eager to help you achieve all your business software needs.

Access to new and updated tax law implements/changes to software in real time.

Early bird discounts and first-look sneak peaks at new products available for upcoming years.

Due Date for 2022 Returns

The due date to file your 2022 income tax return or extension form is April 18, 2023. The due date is April 18, instead of April 15, because of the Emancipation Day holiday in the District of Columbia - even if you don't live in the District of Columbia. If you live in Maine or Massachusetts, you have until April 19, 2023. That is because of the Patriots' Day holiday in those states.

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Increased Standard Deduction

For the 2023 tax season, the standard deduction amounts will be increased slightly as in previous years. The new amounts for 2022 tax returns are below. The increased standard deduction will continue to allow more individuals to file without itemizing deductions on Schedule A.

FILING STATUS	STANDARD DEDUCTION AMOUNT
Married Filing Joint; Qualified Widower	$25,900
Single; Married Filing Separate	$12,950
Head of Household	$19,400
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Personal Exemption

The personal exemption for tax year 2022 remains at 0, as it was for 2020; this elimination of the personal exemption was a provision in the Tax Cuts and Jobs Act.

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Tax Rates

For tax year 2022, the top tax rate remains at 37%. All other rates are below based on taxable income levels.

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Tax Rate	Single Taxable Income	MFJ Taxable Income	HOH Taxable Income
37%	$539,900 and higher	$647,850 and higher	$539,900 and higher
35%	Over $215,950	Over $431,900	Over $215,950
32%	Over $170,050	Over $340,100	Over $170,050
24%	Over $89,075	Over $178,150	Over $89,050
22%	Over $41,775	Over $83,550	Over $55,900
12%	Over $10,275	Over $20,550	Over $14,650
10%	Less than $10,275	Less than $20,550	Less than $14,650

Itemized Deduction Limits

There is no limitation on itemized deductions for 2022 tax returns (just as 2018-2021). The limitation was eliminated by the Tax Cuts and Jobs Act.

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AMT Exemption

The Alternative Minimum Tax exempt for 2022 is $75,900. The exemption begins to phase out at an AGI over $539,900 for single taxpayers. The exemption for MFJ taxpayers is $118,100 and begins to phase out with an AGI over $1,079,800.

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HSA Contribution Limits

The HSA contribution limit for 2022 has increased to $3,650 for single coverage and $7,300 for family coverage.

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Child Tax Credit

The enhanced credit allowed for qualifying children under age 6 and children under age 18 has expired. For 2022, the initial amount of the CTC is $2,000 for each qualifying child. The credit amount begins to phase out where modified adjusted gross income exceeds $200,000 ($400,000 in case of a joint return). The amount of the CTC that can be claimed as a refundable credit is limited as it was in 2020 except that the maximum ACTC amount for each qualifying child increased to $1,500.

The increased age allowance for a qualifying child has expired. A child must be under age 17 at the end of 2022 to be a qualifying child.

ACTC and bona fide residents of Puerto Rico. Bona fide residents of Puerto Rico are no longer required to have three or more qualifying children to be eligible to claim the ACTC. Bona fide residents of Puerto Rico may be eligible to claim the ACTC if they have one or more qualifying children.Advance child tax credit payments. Advance child tax credit payments have not been issued for 2022.

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Child & Dependent Care Tax Credit

For 2022, the child and dependent care credit is non-refundable. The maximum credit percentage also drops from 50% to 35%. Fewer care expenses are eligible for the credit, too. For 2022, the credit is only allowed for up to $3,000 in expenses for one child/dependent and $6,000 for more than one.

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Clean Vehicle Credit

Under the new law people still may be eligible for a tax credit of up to $7,500 for purchasing a new electric vehicle under the renamed Clean Vehicle Credit, and for the first time, starting January 1, 2023 people purchasing used electric vehicles may be eligible for a tax credit up to the lesser of $4,000 or 30% of the sales price, depending on their income. Since credits are a dollar-for-dollar reduction of taxes you owe, you can lower your taxes by up to $7,500. After August 16, 2022, the final assembly of the eligible automobile must be in North America.

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No Recovery Rebate Credit

There were no stimulus payments in 2022, therefore, there will not be a recovery rebate credit to claim for stimulus payments not received.

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No Charitable Deduction For Non-Itemizers

Unless the deduction is extended later in the year, the only way to claim charitable deductions will be through Schedule A.

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Earned Income Tax Credit (EITC)

Age Limits Restored To EIC - The EIC qualifications will return to pre-2021 tax return rules. Therefore, taxpayers who qualified in 2021 that were 65 or older will not be eligible for the EIC in 2022 pending further legislation. Also excluded will be taxpayers aged 19-24 with earned income. The election to use 2019 earned income has also been eliminated.The investment income limitation is also increased from $10,000 to $10,300 and will be adjusted by inflation for years after 2022.

EIC For Taxpayers With Zero Qualifying Children - The credit was expanded in 2022 for taxpayers with zero qualifying children. Those taxpayers will still qualify but for a much lower amount. The maximum for 2022 will be $560 with zero qualifying children.

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Educator Expenses/Deduction

For 2022, the deduction that teachers can claim for expenses paid out of pocket increases to $300.

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Unemployment Exclusion

The $10,200 exclusion for unemployment income was only for 2020 (pending further legislation). Therefore, the entire amount of unemployment benefits received in 2022 will be taxable on your federal income tax return.

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Charitable Contributions

The $300 above the line deduction for cash contributions was originally set to expire after 2020 returns. However, the deduction has been extended to 2022 returns with one important update. Previously, the deduction was capped at $300 per return; for 2022, the deduction will be capped at $300 per taxpayer. This means MFJ returns will have the ability to claim a $600 deduction for cash contributions.

The 60% of AGI limitation for charitable contributions has also been suspended for 2022.

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Forgiven Student Loan Debt

Starting in 2022, most student loan debt incurred for post-secondary education that is forgiven will not be considered taxable income. The rule allowing workers to exclude up to $5,250 of college loans paid by their employer in 2020 from taxable wages was also extended through 2025. The $5,250 cap applies to both student loan repayment benefits and other educational assistance offered by an employer.

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Gift Tax Exclusion

The gift tax exclusion remains $15,000 per recipient for 2022. This means you can give up to $15,000 ($30,000 if your spouse agrees) to each child, grandchild or any other person in 2022 without having to file a gift tax return or tap into your lifetime estate and gift tax exemption. The lifetime estate and gift tax exemption increased to $11.7 million for 2022 ($23.4 million for couples if portability election is timely made).

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Education Tax Benefits

Starting with 2022, the Tuition & Fees Deduction has been eliminated. However, to help with the loss of the Tuition & Fees deduction, the phase-out thresholds for the Lifetime Learning credit were permanently increased. The phase out thresholds now mirror the American Opportunity credit.

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Premium Tax Credit

The suspension of repaying excess premium tax credits was only for the 2020 tax year (pending further legislation). What that means for 2022 is if you receive an excess of premium tax credit for your health insurance premiums, you will have to pay back that amount with your 2022 tax return.

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1099-K Forms

Starting in 2022 tax year, third-party payment settlement networks (e.g., PayPal and Venmo) will send you a Form 1099-K if you are paid over $600 during the year for goods or services, regardless of the number of transactions. Previously, the form was only sent if you received over $20,000 in gross payments and participated in more than 200 transactions. The gross amount of a payment doesn't include any adjustments for credits, cash equivalents, discount amounts, fees, refunded amounts, or any other amounts.

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