TY22 Tax Preparation for Tax Pros
TY22 is coming. That means it is almost our time to shine! But are you prepared to do your best? Many people ask me how I prepare for the start of a new tax season. My process begins and ends with my checklist, a simple “things to do” list that I can easily go through and complete. I feel confident and prepared once I make sure that I’m ready to hit the ground running when the season starts.
Every year I update my checklist well in advance of the season. You will find a Season Readiness Guide that IRS Professional has put together, with my help. I highly recommend downloading this content and reviewing it prior to January 1st!
TY22 Tax Changes
TY 22 is starting to feel more “normal” for me. We don’t have any major overhauls or added pandemic-related changes to deal with. Preparing for the 2022 tax season is looking more like it did prior to the pandemic, where most of the changes we deal with are customary and ordinary. We do still have several items in the CARES Act that will continue into TY22, like early distributions from retirement accounts. But today I am delighted to be sharing what I normally shared every year, before the TCJA and the pandemic… just the numbers!
Here’s what you need to know for 2022:
Standard Deductions:
Single or Married Filing Separately – $12,950
Head of Household – $19,400
Married Filing Jointly – $25,900
Retirement Accounts:
Employees with a 401k, 403b, and most 457 plans are allowed $20,500 in contributions to those plans. Of course, anyone over 50 years old has the option to contribute an additional $6,500. The annual contribution limit for a traditional or Roth IRA is $6,000. Those 50 and older get a catch-up contribution of $1,000.
HSA Contribution Limits:
I don’t see many people taking advantage of this special savings account. I have an HSA account because I’ll take advantage of any opportunity to put my money in an account where all my contributions are not subject to federal taxes, and my earnings and withdrawals are tax-free!
However, only individuals/families with a High Deductible Health Plan (HDHP) can contribute to an HSA. The minimum deductible is $1,400 for individuals and $2,800 for families. If you have an
HDHP, you can contribute up to $3,650 as an individual or $7,300 if you have a family plan. The annual catch-up contribution for those over 55 years old is $1,000.
Alternative Minimum Tax (AMT):
In 1969 Congress decided to make sure that taxpayers earning above a certain income pay their fair share of income tax. The new amounts for 2022 are $75,900 for single filers and $118,100 for married couples who file jointly. There is an exemption phase-out of 25 cents per dollar as soon as a single taxpayer’s income reaches $539,900 or married filing jointly taxpayers reach $1,079,800.
Gift Exclusion:
Should anyone wish to gift another individual money, the annual gift exclusion amount for 2022 is $16,000. There is no limit on how many individuals you can gift throughout the year. Just so long as it’s not above $16,000, you can gift as many people as you want without having to report it to the IRS.
Six Life Events That Impact Tax Returns:
I caution you not to forget about the “6 life events” that have major impacts on tax returns! Make sure you inquire with your clients, new and old, to see if any of the following applies to them.
– Going to College (American Opportunity Credit and Lifetime Learning Credit)
– Getting a new job/starting a new business
– Investing in retirement accounts
– Getting married or divorced
– Having or adopting a child
– Selling a home or assets/investments
In closing, I want to take a moment to wish all of my fellow Tax Preparers a very successful and prosperous TY22! I want you all to achieve and thrive in your business endeavors, and I encourage you to use the precious time you have now to organize and plan for the upcoming season. Treat your business as if it’s a human body. Nourish it and care for it. If you feed it, it will grow! Work on the health of your business as well as yourselves. Now is the time to make any adjustments, implement new strategies and protocols, set standards, plan for all scenarios, and be organized. Very soon, you’ll be hitting the ground running and tax season is not the time to address operational issues.
