Tax Season: 1040 U.S. Individual Income Tax Return
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One of the confusing things about tax season for many taxpayers is that the rules and brackets may be very different from year to year. For example, more than 60 tax provisions posted in Revenue Procedure 2021-45—made public about a year and a half ago—apply to the current filing season’s tax return.
As you pull out your receipts and fire up your computer, here’s a look at some of what was in effect for the 2022 tax year, including some of what was different from 2021. Remember that these adjustments apply to the 2022 tax year—the tax return you’re filing now. If you’re looking for the 2023 tax year adjustments—those that will apply to the return you’ll file in 2024—you’ll find them here.
Tax Brackets and Tax Rates
There are seven tax rates: 10%, 12%, 22%, 24%, 32%, 35%, and 37%. Here’s what the marginal rates—the rate you paid on your last dollar of taxable income—looked like for single and married taxpayers filing jointly in 2022:
- 37% for single taxpayers with income over $539,900 ($647,850 for married taxpayers filing jointly)
- 35% for single taxpayers with income over $215,950 ($431,900 for married taxpayers filing jointly)
- 32% for single taxpayers with income over $170,050 ($340,100 for married taxpayers filing jointly)
- 24% for single taxpayers with income over $89,075 ($178,150 for married taxpayers filing jointly)
- 22% for single taxpayers with income over $41,775 ($83,550 for married taxpayers filing jointly)
- 12% for single taxpayers with income over $10,275 ($20,550 for married taxpayers filing jointly)
- 10% for single taxpayers with income of $10,275 or less ($20,550 for married taxpayers filing jointly)
Keep in mind that we have a progressive tax rate, so don’t simply multiply your income by the marginal rate. Check out this quick (but older) primer for more on taxable income and marginal rates.
Standard Deduction Amounts
The standard deduction amounts in 2022 were $12,950 for single taxpayers and married individuals filing separately, $19,400 for heads of household, and $25,900 for married couples filing jointly and surviving spouses.
The additional standard deduction amount for the aged or the blind was $1,400, and that amount increased to $1,750 if an unmarried taxpayer was also not a surviving spouse in 2022.
For 2022, the standard deduction amount for an individual who may be claimed as a dependent by another taxpayer could not exceed the greater of $1,150 or the sum of $400 and the individual’s earned income.
Personal Exemptions
The personal exemption for the tax year 2022 is zero—that’s true for all years 2018-2025 as a result of the Tax Cuts and Jobs Act (TCJA).
Itemized Deductions
For 2022, there was no limit on itemized deductions. Here’s what you need to know about some of those itemized deductions, found on Schedule A:
- Medical and Dental Expenses. The “floor” for medical and dental expenses was 7.5%, meaning that you may only deduct costs which exceeded 7.5% of your AGI in 2022.
- State and Local Taxes. As in 2021, deductions for state and local sales, income, and property taxes could not exceed $10,000 ($5,000 for married taxpayers filing separately) in 2022.
- Home Mortgage Interest. The home mortgage interest deduction did not change in 2022. That means that you could deduct interest used to buy, build or improve your home of up to $750,000 ($375,000 for married taxpayers filing separately), though for mortgages taken out before Dec. 15, 2017, the limit remained $1,000,000 ($500,000 for married taxpayers filing separately).
- Charitable Donations. There is no longer an above-the-line deduction for charitable contributions—only those taxpayers who itemized could claim a charitable deduction in 2022. Those deductions were limited to 30% of AGI for contributions of non-cash assets—if held for more than one year—and 60% for cash donations.
- Casualty and Theft Losses. Only those losses attributable to a federal disaster were deductible in 2022.
- Miscellaneous Deductions. As a result of the TCJA, miscellaneous deductions which exceed 2% of your AGI were eliminated. That remains in effect for 2022. And yes, that means that there is still no home office deduction for employees—there is no Covid or work-from-home exception.
Health Coverage
For the 2022 tax year, taxpayers were still required to have minimum essential health insurance coverage or qualify for a coverage exemption. However, there’s no real penalty for not doing so since the shared responsibility payment was zero in 2022.
Alternative Minimum Tax (AMT)
The AMT exemption amount for 2022 was $75,900 for single taxpayers with a phaseout beginning at $539,900; the exemption amount was $118,100 for married couples filing jointly with a phaseout beginning at $1,079,800.
Child Tax Credit
The child tax credit had been enhanced in 2021 but was rolled back in 2022 to $2,000 per qualifying child. Phaseouts, which are not indexed for inflation, begin with an AGI of more than $400,000 for married taxpayers filing jointly and more than $200,000 for all other taxpayers.
For other qualified dependents than qualifying children, you could claim a $500 credit in 2022.
Child and Dependent Care Tax Credit
The child and dependent care tax credit was also subject to changes in 2021 that did not roll over to 2022. For 2022, the credit was nonrefundable, and you could claim the credit on employment-related expenses of up to $3,000 for one qualifying person or $6,000 for two or more qualifying persons. The maximum credit was 35% of your employment-related expenses.
Earned Income Tax Credit (EITC)
The EITC is another credit that was expanded in 2021, but not 2022. The minimum age to claim the EITC was 25 for 2022, while the maximum was 65 years old—these are different from 2021. Also, the eligibility rules that allowed foster and homeless youth who have aged out of the system to claim the credit were not applicable for 2022.
For 2022, the maximum EITC amount available was $6,935 for married taxpayers filing jointly with three or more qualifying children. Income phaseouts apply.
Adoption Credit
The maximum credit allowed for adoptions was $14,890 in 2022, subject to phaseouts.
Teacher Expenses
In 2022, teachers who bought supplies and other qualifying items used in the classroom could claim an above-the-line deduction of $300 ($600 for married taxpayers filing jointly if both spouses were eligible educators).
Education
The maximum deduction for interest paid on qualified education loans remained $2,500 for 2022, with a phaseout beginning at $70,000 ($145,000 for married taxpayers filing jointly) and a complete phaseout at $85,000 or more ($175,000 or more for married taxpayers filing jointly).
The Lifetime Learning Credit was phased out for taxpayers with modified AGI over $80,000 ($160,000 for married taxpayers filing jointly).
Employment-Related Benefits
- In 2022, the monthly limitation for the qualified transportation fringe benefit and qualified parking was $280.
- The maximum amount you could contribute to a health savings account (HSA) in 2022 was $3,650 for an individual and $7,300 for a family. Taxpayers aged 55 and older could make an extra $1,000 catch-up contribution. Eligibility for an HSA required enrollment in a high-deductible health plan.
- The dollar limitation for employee contributions to health flexible spending arrangements (FSA) in 2022 was $2,850. If the cafeteria plan permits the carryover of unused amounts, the maximum carryover amount was $570.
Foreign Earned Income Exclusion.
For the 2022 tax year, the foreign earned income exclusion was $112,000.
Final Thoughts
It’s a lot, right? And if we’ve learned anything from the past few years, it’s that last-minute changes can happen (unemployment compensation in 2020, anyone?). For up-to-date information, check back with our Forbes tax team—or ask your tax professional for more details.