By David J. Hawks | David J. Hawks, CPA, EA
With the end of 2021 came several tax laws that expired. These laws require Congressional extender bills to allow the laws to remain in force and be retroactive back to the beginning of 2022. Congress may not be able to extend any of these laws given the current political climate so here are some tax laws that are currently not in effect for 2022.
Individual Tax Items
- In 2021, there was an increase in the child tax credit. In 2022, the credit reverts to $2,000 (from $3,000). The age of children eligible for the credit also goes back to those under 17 instead of under 18. The credit is no longer fully refundable ($1,400 max) and reverts to the lower income phaseouts that were in place before 2021.
- In 2021, there was also an increase in the dependent care credit. In 2022, the credit reverts to 20% (from 50%). The lower adjusted gross income (AGI) phaseout becomes applicable so higher income earners will receive less or none of the credit. The qualified expenses also revert to $3,000 for one child or $6,000 for more than one (from $8,000 and $16,000).
- Individuals with charitable contributions who used the standard deduction in 2021 were able to claim a $600 deduction on the face of their federal tax return. This $600 deduction goes away in 2022.
- The 2021 increase to the earned income credit for taxpayers without children and for older and younger taxpayers reverts back to 2020 rules.
- In 2020 and 2021, an itemized deduction for qualified charitable contributions was allowed up to 100% of AGI. In 2022, the limit goes back down to 60% of AGI.
- The credits for nonbusiness energy property (insulation, windows, doors, etc.) and alternative fuel vehicle refueling property (electric car chargers) expired at the end of 2021.
- The itemized deduction for mortgage insurance premiums is no longer deductible as mortgage interest in 2022.
- Required minimum distributions returned for taxpayers who are older than 72 after 2018.
- Cafeteria plan deferrals for childcare revert to $5,000 (from $10,500).
Business Tax Items
- Full expensing of R&D costs changes to a 5-year amortizing asset deduction in 2022.
- The business interest expense deduction from 30% of EBITDA in 2021 to 30% of EBIT in 2022.
- The 1099-K reporting threshold of $20,000 for 2021 dropped to $600 for 2022, meaning those who receive payments from credit cards, or third-party payment networks such as PayPal or Venmo will receive the tax form when they may not have received one in the past.
- The Employee Retention Credit for all businesses, including startups, expired at the end of 2021. It can still be claimed on an amended 941 for 2020 and 2021.
This is not an exhaustive list of tax law changes. Please consult your tax adviser if you have questions regarding any of these or other tax laws that may have expired at the end of 2021.
If you need the help of a CPA who understands real estate taxation, you can call me at (480) 626-5557 or email me at firstname.lastname@example.org.