2022 Tax Reform

The American Rescue plan which aided millions of Americans through tax breaks and credits has not been extended for the 2022 tax year. Many of these tax benefits will either revert back to the previous rules or expire entirely.

For self-employed persons, beginning with your 2022 taxes, if you receive payments through a third party provider under a business account, you will now receive form 1099-K if amounts processed are over $600 with any number of transactions. Prior to tax year 2022, third party providers only issued a 1099-K if over $20,000 was processed and more than 200 transactions.

Which tax benefits are changing or reverting to previous tax rules?

• Child Tax Credit

• Child and Dependent Care Credit

• Earned Income Tax Credit

• Recovery Rebate Credit

• Sick and Family Leave Credits for Self-Employed

• Charitable Contribution Deduction

Child Tax Credit

For tax year 2022, the child tax credit reverts back to the benefits available prior to the American Rescue Plan. The credit is up to $2,000 per qualifying child and income dependent. Each dependent child must be under the age of 17. Advanced payments were not issued for tax year 2022.

Child and Dependent Care Credit

For tax year 2022, the credit adjusts back to its previous version. Up to 35% of $3,000 of child care expenses for a dependent child under 13, an incapacitated spouse or parent, or another dependent so that you can work or look for work. If you have two or more dependents, the credit will be up to 35% of $6,000 on expenses. The credit is dependent on household income.

Earned Income Credit

Eligibility was expanded under the American Rescue Plan to cover a wider range of filers. For tax year 2022 age requirements have reverted back to there previous version. Taxpayers without children have to be between the ages of 25-65 at year end to claim the credit.

Self-Employed Sick and Family Leave Credits

The American Rescue Plan extended refundable tax credits for sick and family leave for both eligible self-employed persons and small business owners. The credit expires after tax year 2021.

Recovery Rebate Credit If you have not received your third stimulus payment this amount must be reconciled on your 2021 taxes. The recovery rebate credit will not be available on your 2022 taxes.

Charitable Contributions

For tax year 2022, you can no longer claim the deduction for cash donations up to $300 ($600 married filing jointly) if you claim the standard deduction. If you can itemize your deductions you will still be able to claim your charitable deductions.