11 Tax Updates in 2022 to know about NOW

Standard deductions amounts were increased for this year due to inflation.  If you’re married, the deduction is $25,900 with an added $1400 for each spouse over the age of 65.  If you’re single, you can claim $12,950 while the head of household’s standard deduction is $19,400 with $1750 additional if you are over 65 years old.  

Regarding stimulus checks, some were eligible for a 3rd round but didn’t receive payment or didn’t get the full amount and relief was available in a 2021 recovery rebate credit.  And if you like to make regular donations throughout the year, take note that charitable cash contributions of $600 expired at the end of 2021 that were claimed by those who used this standard deduction on their taxes.  

In 2022, it’s interesting to note that if you like using PayPal and Venmo, you will start receiving Form 1099-K when you pay over $600/year for goods or services and prior this amount was 20K with more than 200 transactions, a vast difference.  The good news is it doesn’t apply to payments for family and friends.  

Retired or saving to retire?  Required minimum distributions will be less in 2022 than prior and for those still saving for retirement, amounts are higher. For example, the maximum 401K contribution is $20,500 and if you were born before 1973 you can still add $6500 as a “catch-up.”  IRA’s remain at $6000 with $1K catch up over 50 years old.  Parking and transportation benefits that employers can help their employees with include an employer-provided tax-free parking at $280 per month. The 2022 exclusion for mass transit passes and commuter vans is also $280.  

An increase of $4200 in 2022 can be found for the social security annual wage base of $147,000.  The social security tax rate on both employers and employees remains at 6.2% and both workers and employers continue to pay 1.45% medicare tax on all wages.  For employees only, .9% medicare surtax in 2022 for income over $200K for singles and $250K for couples will be paid.

In 2022, an increase of 2.5 cents for the standard business mileage rose to 58.5 cents per mile.  Medical and military driving is 18 cents and charitable driving remained at 14 cents per mile.  

For many more tax updates for 2022, visit this article by Kiplinger regarding tax changes and key amounts.  If you would like to ensure your staffing firm tracks all income, tax, worker’s compensation and unemployment data needed for your firm to operate seamlessly, visit COATS Staffing Software.