As the end of 2020 draws near, many people are looking ahead to their tax returns for 2022. There are a few new tax laws that could affect your return, so it’s important to understand them before filing says Aron Govil.
In this article, we’ll go over the most important changes and how they could impact you.
1. The standard deduction has increased:
The standard deduction has been increase for both single and married taxpayers. For single taxpayers, the standard deduction is now $12,400, up from $10,000 in 2020. For married taxpayers filing jointly, the standard deduction is now $24,800, up from $20,000 in 2020. This could result in a lower tax bill for many people.
2. The child tax credit has been increased:
The child tax credit has also been increase. For children under the age of 17, the credit is now $2,000 per child, up from $1,800 in 2020. This could result in a larger refund or lower tax bill for families with children.
3. The estate tax exemption has increased:
The estate tax exemption has been increase to $11.4 million per individual, up from $10 million in 2020. This means that estates worth less than $11.4 million will not be subject to the estate tax.
4. The self-employment tax deduction has been increased:
The self-employment tax deduction has been increase to $4,000, up from $3,000 in 2020. This could reduce the amount of self-employment taxes you owe.
5. The net investment income tax has been repealed:
The net investment income tax has been repeal for 2021 and 2022. This means that you will no longer have to pay this tax on your investment income says Aron Govil.
6. The medical expense deduction has been expanded:
The medical expense deduction has been expand to include more expenses. For example, you can now deduct expenses that exceed 10% of your adjusted gross income, up from 7.5% in 2020. This could allow more people to qualify for the deduction.
7. The state and local tax deduction has been limited:
The state and local tax deduction has been limit to $10,000 per year. This means that you can only deduct the first $10,000 of your state and local taxes. This could increase your tax bill for states with high taxes.
8. The home mortgage interest deduction has been reduced:
The home mortgage interest deduction has been reduce to $750,000, down from $1 million in 2020. This could also reduce the amount of mortgage interest you can deduct on your taxes.
9. The student loan interest deduction has been eliminated:
The student loan interest deduction has been eliminate for 2021 and 2022. This means that you will no longer be able to deduct the interest you pay on your student loans.
10. The alimony deduction has been eliminated:
The alimony deduction has been eliminate for 2021 and 2022. This means that you will no longer be able to deduct the alimony you pay to your ex-spouse explains Aron Govil.
These are just a few of the most important changes that could affect your tax return for 2022. So be sure to talk to a tax professional to learn more about how these changes could impact you.
FAQs:
Q: I’m single and I don’t have any children. Will the new tax laws benefit me?
A: The standard deduction has been increase for single taxpayers, so you may end up paying fewer taxes under the new laws.
Q: I’m married and we have two children. Will the child tax credit benefit us?
A: Yes, the child tax credit has been increase, so you may receive a larger refund or pay fewer taxes under the new laws.
Q: I own a small business. Will the self-employment tax deduction help me save money?
A: Yes, the self-employment tax deduction has been increase, so you may pay less in self-employment taxes.
Conclusion:
The new tax laws that went into effect in 2021 could have a significant impact on your taxes says Aron Govil. Be sure to talk to a tax professional to learn more about how these changes could affect you. Some of the most important changes include the increased standard deduction, the increased child tax credit, and the repeal of the net investment income tax.