2022 TAX CREDIT CHANGES

[Lee B]

IRS NEWS WIRE   2022-213

"Some tax credits return to 2019 levels. This means that affected taxpayers will likely receive a significantly smaller refund compared with 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."

[Patrick Michael]

Can't wait for all those "How come I'm getting back less than last year" discussions!

[JRS]

No above the line charitable deduction.  Those who do not itemize cannot take the $600 above the line deduction for 2022.

[Sara EA]

After years of hearing clients respond "what's the max?" when asked how much if anything they gave to charity, we expected almost everyone to claim $300 or $600.  In our organizer, we didn't mention amounts but asked how much they gave in cash, debit, credit, or check to charities for which they had receipts.  Surprisingly, the majority indicated zero.  Many others entered amounts well below the cap.  Those generous folks who gave more than those caps listed specific numbers like $2850 or whatever, so you know they weren't made up.  No one said exactly $300 or $600.  (My most generous client gave over $24k, working toward donating half his income, but he of course itemizes.)  Anyone else experience this trend?

[mcb39]

Yes, nobody had exactly $300 or $600.  I think it is a shame that they took this tiny perk away.  People really liked it and it didn't amount to much.  I have a client who has already informed me that he is donating his entire RMD to three charities.  Of course it will give him a deduction that he doesn't need; but kudos to him because he doesn't need the money either and has no wife or children.

[joanmcq]

If he does a qualified distribution (over 70 & given directly to the charity from  the broker) he won’t have a deduction but doesn’t have to take the RMD as income either!  Win/win. 

[mcb39]

16 hours ago, joanmcq said:

If he does a qualified distribution (over 70 & given directly to the charity from  the broker) he won’t have a deduction but doesn’t have to take the RMD as income either!  Win/win. 

All of the above.  We are talking about an excess of $30,000.  Arrangements have already been made.  With the standard deduction, he barely owes any tax as a rule.  Of course, he can't take that above the line $300 this year either.

[Gail in Virginia]

The best part of the QCD for some of my clients is that it may result in less social security income being taxable.