Tax Time Guide: Things to Consider when Filing a 2022 Tax Return
With the 2023 tax filing season in full swing, the Internal Revenue Service reminds taxpayers to gather their necessary information and visit IRS.gov for updated resources and tools to help with their 2022 tax return.
This news release is part of a series called the Tax Time Guide, a resource to help taxpayers file an accurate tax return. Additional guidance is available in Publication 17, Your Federal Income Tax (For Individuals).
Things to consider before filing
Taxpayers should wait to file until they receive all their proper tax documents, or they risk making a mistake that could cause delays.
They should also review their documents carefully. If any of the information is inaccurate or missing, taxpayers should contact the payer right away for a correction or to ensure the issuer has their current mailing or email address.
Creating an IRS Online Account can help taxpayers securely access information about their federal tax account, including payments, tax records and more.
Organized tax records make preparing a complete and accurate tax return easier and may help taxpayers find overlooked deductions or credits.
Taxpayers with an Individual Taxpayer Identification Number or ITIN may need to renew it if it’s expired and is needed on a U.S. federal tax return. If they don’t renew an expiring or expired ITIN, the IRS can still accept their return, but it may delay processing or credits owed.
Changes to credits and deductions for tax year 2022
Unlike 2020 and 2021, there were no new stimulus payments for 2022, so taxpayers should not expect to get an additional payment in their 2023 tax refund.
However, taxpayers may still qualify for temporarily expanded eligibility of the Premium Tax Credit, a refundable credit that helps eligible individuals and families cover the premiums for their health insurance purchased through the Health Insurance Marketplace. To get this credit, taxpayers must meet certain requirements and file a tax return with Form 8962, Premium Tax Credit.
Also, eligibility rules changed to claim a Clean Vehicle Credit under the Inflation Reduction Act of 2022.
Some tax credits return to 2019 levels. This means that taxpayers will likely receive a significantly smaller refund compared with the previous tax year.
Changes include amounts for the Earned Income Tax Credit (EITC), the Child Tax Credit (CTC) and the Child and Dependent Care Credit will revert to pre-COVID levels.
- For the EITC, eligible taxpayers with no children who received roughly $1,500 in 2021 will now get $500 for the 2022 tax year.
- Those who got $3,600 per dependent in 2021 for the CTC will, if eligible, get $2,000 per dependent for the 2022 tax year.
- The Child and Dependent Care Credit returns to a maximum of $2,100 in 2022 instead of $8,000 in 2021.
Finally, taxpayers that don’t itemize and take the standard deduction cannot deduct their charitable contributions this year.
Transition year for 1099-K reporting
There are no changes to what counts as income or how tax is calculated, including income from the sale of personal assets. Taxpayers must report all their income on their tax return unless it’s excluded by law.
Form 1099-K, Payment Card and Third-Party Network Transactions, is an IRS information return used to report certain payment transactions and helps to improve voluntary tax compliance. Taxpayers use this information return with their other tax records to determine their correct tax liability. 2022 Forms 1099-K should have been furnished to the payee by Jan. 31, 2023.
The American Rescue Plan of 2021 changed the reporting threshold for third-party settlement organizations, including payment apps and online settlement organizations. The new threshold requires reporting of transactions in excess of $600 per year; changed from the previous threshold of an excess of $20,000 and an excess of 200 transactions per year. Third-party settlement organizations are required to report payments for goods and services.
On Dec. 23, 2022, the IRS announced that calendar year 2022 will be treated as a transition year for the reduced reporting threshold of $600.
Even though the Form 1099-K reduced reporting requirement for third-party settlement organizations is delayed, some individuals may still receive a Form 1099-K who have not received one in the past. Some individuals may receive a Form 1099-K for the sale of personal items or in situations where they received a Form 1099-K in error (i.e. for transactions between friends and family, or expense sharing).
Money received as a gift or to reimburse shared meals or rent should not be reported on a 1099-K. Payments should indicate whether they are personal to family and friends or a business transaction for goods and services.
If the information is incorrect on the 1099-K, taxpayers should contact the payer immediately. The payer’s name appears in the upper left corner on the form. The taxpayer should keep a copy of all correspondence with the payer with their records.
If a Form 1099-K is received in error and a corrected Form 1099-K can’t be obtained, follow the IRS’ updated guidance at Understanding Your Form 1099-K.