Although the Build Back Better Act wasn’t passed by Congress in 2021, your tax situation may still be affected by tax changes in the coming year, since some tax figures are adjusted for inflation annually.
Your 2021 individual tax return is generally due by April 18 (assuming you didn’t file for an extension), so you’re probably concerned with your 2021 tax bill right now and may not have thought of your tax situation for 2022.
However, it’s worthwhile to plan ahead and familiarize yourself with tax amounts that may have changed for this year. Here are some answers to common questions about tax amounts for 2022.
How much can I contribute to a 401(k) plan if my job offers one?
For 2022, the limit on contributions to a 401(k) or 403(b) plan has risen to $20,500 from $19,500 in 2021. If you’re age 50 or older, you can also make an additional $6,500 catch-up contribution.
What’s the maximum contribution I can make to an IRA this year?
The maximum amounts for IRA contributions haven’t changed from 2021.
In 2022, eligible taxpayers can contribute $6,000 a year or up to 100% of their earned income to a traditional or Roth IRA.You can also make another $1,000 “catch-up” contribution if you’re age 50 or older.
Do I need to withhold and pay FICA tax if I sometimes hire a babysitter or cleaning person?
In 2021, the threshold for when a domestic employer must withhold and pay FICA for house cleaners, babysitters, etc. was $2,300. For 2022, this threshold has risen to $2,400.
What amount will I need to earn this year before I can stop paying Social Security on my earnings?
This year, the Social Security tax wage base has risen from $142,800 to $147,000, so you won’t need to pay Social Security tax on any amount earned above that level. However, you’ll still need to pay Medicare tax on all amounts that you earn.
Will I qualify to itemize deductions in 2022 if I didn’t qualify the last time I filed?
The passage of a 2017 tax law increased the standard dedication and reduced or eliminated various other deductions, removing the tax benefit of itemized deductions for many people.
For 2021, the standard deduction amount was $25,100 for married couples filing jointly and $12,550 for single filers. For 2022, these amounts have risen to $25,900 for married couples filing jointly and $12,950 for single filers. For heads of households, the standard deduction amount has risen from $18,000 to $19,400.
You won’t itemize unless your itemized deductions (such as mortgage interest) are greater than the applicable standard deduction amount.
Can I claim charitable deductions if I don’t itemize deductions on my 2022 return?
Generally speaking, if you claim the standard deduction on your federal tax returns, you aren’t eligible to deduct charitable donations. However, non-itemizers may be able to claim a limited charitable contribution deduction for the past two years, thanks to two COVID-19-relief laws. For 2021, this deduction is $600 for married couples filing jointly and $300 for single taxpayers. Unfortunately, this tax break has expired for 2022 unless Congress acts to extend it.
What amount can I give to one person this year before I trigger a gift tax return?
For 2022, the annual gift tax exclusion has risen from $15,000 to $16,000. This amount typically only increases every few years since it’s only adjusted in $1,000 increments.
Getting a clearer picture of your taxes
There may be other tax amounts that apply to your specific situation. If you have questions or need more information about your 2022 taxes, contact us.