The Tax Situation in 2022

Picture of Carla Medrano

Tax law changes are as uncertain as ever, as Congressional bills are often stuck with a split Senate and individual representatives debate differing agendas. Given this uncertainty, the best tax advice is to stay flexible. But what about the economy and new inflationary challenges? Here is a preview of the tax landscape and some suggestions.

  • Tax rates. The current income tax rates range from 0% to 37%. Capital gains tax rates remain at 0% to 20% with a potential 3.8% surtax. However, inflation of 5.9% expands the income brackets subject to the tax.

What could change: There is a desire to raise both income and capital gains tax rates on higher-income taxpayers. Rates could rise to over 39% for both high-income and high-investment earnings. There are even proposals to make the change retroactive to minimize your ability to plan for the change.

  • The child tax credit. In 2022, the $3,000 per child credit for kids ages 6 through 17 ($3,600 for children under 6) is rolled back to $2,000 per qualifying child through age 16. The monthly advance payments of the credit is also no longer available.

What could change: Many in Congress want the expanded child tax credit to be made permanent. Your best bet is to plan for the lower credit, but to be alert for an expansion of the benefit.

  • The child and dependent care credit. This credit is also returning to 2020 dollar amounts. If you have one qualifying child, the maximum credit in 2022 is $1,050. For two or more children, the maximum credit is $2,100. In 2021, the maximum credit was $4,000 for one child and $8,000 for two or more children.

What could change: As with the child tax credit, there are politicians who want to expand the higher benefit. Plan for the lower amount, but be prepared to act if the increase is brought back in 2022.

  • 1099-Ks are more common. The IRS is expanding the use of Form 1099-K to report electronic payments from customers by way of credit cards, debit cards or payments to third party providers such as PayPal. You’ll receive a Form 1099-K from each financial institution or third-party provider from whom you’ve received $600 (down from $20,000).
  • Cryptocurrency is in the spotlight. If you own cryptocurrency, expect to have holders of your currency to begin reporting your transactions to the government. While cryptocurrency reporting requirements are required in 2023, many institutions are implementing the rules in 2022.

What could change: An even greater expansion of these reporting requirements as the IRS focuses attention on unreported income and underreported sale of digital currency property.

At this point it is hard to tell what will pass into law, if anything. On the other side of the coin, the mounting debt situation is becoming more troublesome to hide or pass down the road. Your best bet is to stay alert and ask for assistance.

No Professional Advice, Client Relationship, or Reliance on Information

Please note that any information or content on our Website, or any forms or tools on our Website which allow you to submit information or make calculations, and your use thereof, are not intended to provide any kind of professional advice, consultation or service, including but not limited to, legal, accounting, tax, or business advice. Nor does any such information, content, forms, or tools, or your use thereof or reliance thereon, create or constitute an attorney/client, accountant/client, or consultant/client relationship. You should therefore not use our Website or reliance on any information, content, forms, or tools on our Website as a substitute for any kind of professional advice. Rather, you should consult with a licensed professional, including one employed by our Company, for any accounting or tax questions you may have. You agree that we will not be liable to you or to any third party to the extent you treat or consider any information, content, forms, or tools on our Website as constituting any kind of professional advice. The information and content, including but not limited to forms and tools, presented on or made available through our Website are made available solely for general information purposes. We, therefore, do not warrant the accuracy, completeness or usefulness of any such information, content, forms, or tools, and any reliance you place on the same is strictly at your own risk.  We disclaim all liability and responsibility arising from any reliance placed on such materials by you or any other visitor to our Website, or by anyone who may be informed of any of its content.

Our Website provides illustrative lists of services that we provide. Nothing contained on our Website shall be construed as an offer or guarantee to provide any particular services to you, nor shall anything on our Website be construed as a direct solicitation for employment by any persons, companies, or organizations. Prior results we have obtained for others do not guarantee a similar outcome.

Share This
Beaird Harris

Bitcoin Update

Discover how Bitcoin ETFs are simplifying investment options in our latest update. Our investment committee outlines the process of incorporating Bitcoin ETFs into portfolios for

Read More »
Ginnie Baker

3 Common Investing Mistakes

Many people start out managing their own investments. But as their earnings and assets grow, their financial needs and challenges become more complex—and continuing to

Read More »
schedule call

Schedule a complimentary call today.

We’ll help you get started and learn more about Beaird Harris.