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2022 brought with it a unique set of challenges, changes, and opportunities. As we enter tax season, we want to make sure you’re prepared. Here’s what you need to know before you file.
Dates to Know
Filing Deadline: Filing can take place from January 23 through April 18, 2023.
Extension Deadline: Make sure you file for an extension by April 18, 2023. Remember, if you ask for an extension, you must file by October 15, 2023.
Refunds
While there’s no guarantee when your refund will come through, the IRS says that filing electronically and choosing direct deposit as your payment method may speed up the process. If you received Earned Income Tax Credit or Additional Child Tax Credit, the law states that your refund can not be processed until at least the middle of February.
2022 Tax Brackets
According to the IRS, the highest tax rate will be 37% for individual single taxpayers whose income is above $539,900. For married couples that file together, this number will go up to $647,850. If you’re married but filing separately, it will be $323,925. Finally, Head of Household will be taxed 37% at an income of $539,900.
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Due to inflation, the cost of everyday items has grown more expensive, increasing the cost of living. The IRS works with the overall cost of living and adjusts tax brackets to reflect what that looks like for individuals and families alike.
2022 Deductions
Standard: Remember that a standard deduction is one where you have not made any itemized deductions and are just working with the part of your income that is non-taxable. For 2022, this will be $12,950 for single filers and $25,900 for married couples filing together. These numbers are slightly increased from 2021, where single taxpayers saw a standard deduction of $12,500 and married joint filers were at $25,100.
Itemized: Itemizing your deductions takes more time and effort but may be beneficial if you end up with more than a standard deduction will give you. If you aren’t sure what’s best for you, we recommend reaching out to a tax professional to help you decide. If you do want to itemize your deductions, here are some things you may be able to add to that list:
- Health insurance
- Mortgage interest
- Medical bills
- Student loan interest
- Educational bills such as tuition
- Donations to charities and non-profits
- State taxes
- Local taxes
- Home improvement (energy saving)
- Electric car credit
- Business expenses
- HSA (Health Savings Account) contributions
It’s important to note this is a condensed list and there will be limits from the IRS on any itemized deductions. As we stated above, the best bet is to speak to an accountant or tax professional with any concerns.
What’s New?
Many tax credits are going back to 2019 levels, mostly those that were adjusted due to the pandemic. This includes the Child Tax Credit, Earned Income Tax Credit, and the Child and Dependent Care Credit.
The one that will have the biggest impact is the Child Tax Credit. If you received the higher credit of $3,600 last year, you would now receive $2,000 per dependent, if eligible.
No matter if you’re single, married, doing a standard deduction, or itemizing, making sure your taxes are correct is crucial. When in doubt, hire a professional, it just may help you get more out of your tax return this year!
Please remember this article is just a guideline and Churchill Mortgage does not give any tax advice. Now, if you’re hoping to buy or refinance in 2023 and are looking for home loan advice, that we can give! Click here to connect with a Home Loan Specialist.
