The IRS has issued Revenue Procedure 2021-45, which reported the inflation-adjusted numbers for tax rates and many deductions and credits for tax year 2022.
Here is some of what is new for 2022 -
THE STANDARD DEDUCTION
· Married Filing Joint/Qualifying Widow(er) = $25,900
· Head of Household = $19,400
The Standard Deduction for a dependent is the greater of (1) $1,150, or (2) the sum of $400 and the individual's earned income (not to exceed $12,950).
PERSONAL EXEMPTION AMOUNT
There is no longer a personal exemption deduction. However, the amount of the gross income limitation for determining if a person is a qualifying relative is $4,400.
HEALTH CARE FLEXIBLE SPENDING ARRANGEMENT
The maximum amount that an employee can contribute to an employer-sponsored “pre-tax” Flexible Spending Arrangement (FSA) for health care expenses is $2,850. The maximum carryover amount is $570.
HEALTH SAVING ACCOUNTS AND HIGH DEDUCTIBLE HEATH PLANS (from a previous IRS release)
The Health Savings Account contribution limit is $3,650 for a self-only plan and $7,300 for a family plan. The catch-up contribution for those age 55 or older is $1,000.
The High Deductible Health Plan minimum deductible is $1,400 for a self-only plan and $2,800 for family coverage.
The High Deductible Health Plan maximum out of pocket is $7,050 for individuals and $14,100 for families.
FOREIGN EARNED INCOME EXCLUSION
The foreign earned income exclusion is $112,000.
The adjustment to income for expenses paid by grade K-12 teachers, instructors, counselors, principals, and aides for books, supplies, computer hardware, software, and services, equipment, personal protective equipment, and supplementary materials is limited to $300, or $600 on joint returns if both spouse quality.
As usual, I am in the process of preparing a compilation of “What’s New for 2022” and will make it available for purchase when completed.