While, unlike 2020 and 2021, it seems that the deadline for the 2022 tax season won’t be pushed back, several other tax changes could impact you and your business.
The 2022 tax season is the third one since the COVID-19 pandemic began, and as has been the trend, there are a lot of changes. It’s unlikely that the 2022 tax season will look like it did in past years, so business owners must be aware of tax changes that may impact how they file. These new complications are a sign of the times, and it’s becoming clear that we’re gearing up for a “new normal.” While, unlike 2020 and 2021, it seems that the deadline for the 2022 tax season won’t be pushed back, several other tax changes could impact you and your business.
Economic Impact Payments are those stimulus checks that went out during the third round sent out in March. The maximum amount that one could receive ($1,400) plus any payments for qualified dependents won’t be taxed by the federal government. That said, it is possible you received less than you were entitled to, which can be taken advantage of as a credit on your 2021 return.
The Child Tax Credit has been enhanced with a new maximum of $3,000 or $3,600 for children under six years old. The credit is also fully refundable and allows for advance payments, with some advance CTC payments going out back in July. These credits will need to be factored into their tax returns, potentially causing filing headaches. As a result of these tax changes, tax refunds for those who received CTC payments may be lower than expected.
Due to new laws and tax changes, there are still unique breaks for some workers who lost work in 2020. Essentially, the first $10,2000 of unemployment benefits is exempt from being taxed—provided your AGI was below $150,000. Many people are unaware of this, so it’s important to be thorough!
ARPA has changed the maximum dependent care credit. For families with an AGI of $125,000 or less, it’s now $4,000 for one child and $8,000 for two or more children. That credit is also now fully refundable, so be sure to get the most out of your tax filing.
The Consolidated Omnibus Budget Reconciliation Act, or COBRA, allows employees who leave their companies to continue to get health insurance for some time, typically 18 months. There is a cost, though, plus a standard 2% administrative fee. However, because of ARPA, there is a 100% subsidy for COBRA premiums between April 2021 to September 2021. As a result, the payments are tax-free.
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