IRS Boosts 2022 Standard Deductions for Inflation Relief

The good news is that taxes are going up. The tax deduction for married couples filing jointly has gone up to $25,900. It was $25,000 before. For single people and people who are married but not filing jointly, the deduction went up to $12,950, and for heads of households, it went up to $19,400!

The 2017 Tax Act will not be changed. The top rate is 37% for people who are single and have an income higher than $539,900. For people who are married, the top rate is 37% if they have an income over $647,850. There are three rates: 10%, 12%, 22%.

For the tax year 2022, the amount that you can contribute to your 401(k) plans is $20,500. That is up from $19,500.

This year, if you file your taxes for 2023, there will be changes.

Also, Read Which Student Loan Should You Pay Off First?

The Alternative Minimum Tax exemption for the year 2022 is $75,900. This amount begins to phase out at $539,900 ($118,100 for married couples filing jointly). The 2021 exemption was $73,600 and began to phase out at $523,600 ($114,600 for married couples filing jointly). 

The maximum Earned Income Tax Credit amount for the year 2022 is $6,935. This is up from $6,728 in the previous tax year. The revenue procedure has a table with information on the amount of tax credit you will receive for other categories, income thresholds, and phase-outs. 

For the year 2022, the monthly limit for transportation and parking is $280.

 For the years 2022, the limit for how much a person can save with an FSA is increased to $2,850. For a cafeteria plan that allows you to carry over unused amounts, there is now a maximum of $570. This is an increase of $20 from the year 2021. 

For the tax year 2022, people with a Medical Savings Account who have self-only coverage need to have a deductible of at least $2,450. This amount has increased by $50 from the last tax year. The maximum out-of-pocket expense amount for this type of account holder is now $4,950. This number has gone up by $150 from the last tax year. For 2022, the annual deductible for family coverage is not less than $4,950 and cannot be more than $7,400. The out-of-pocket expense limit is $9,050.

 The number for the Lifetime Learning Credit in § 25A(d)(2) is not adjusted for inflation. The Lifetime Learning Credit is phased out for people with modified adjusted gross income over $80,000 or $160,000 if they are married. 

The foreign earned income exclusion for the tax year 2022 is $112,000. It is more than the amount of the exclusion for the tax year 2021, which was $108,700. 

If you die in 2022, your estate can be worth up to $12 million. If you die in 2021, it can be worth up to $11.7 million. 

 For the year 2022, the maximum credit for adoption is $14,890. This is higher than $14,440 for 2021.

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Also Read 430,000 People to Receive Tax Refund From IRS

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