Jan 25, 2023

Great Bend CPA: Expect changes on 2022 tax returns

Posted Jan 25, 2023 4:00 PM

Great Bend Post

No tax season is ever the same. The filing season opened on Jan. 23 and will run through April 18 this year. The Internal Revenue Service has issued a warning that refunds may not be as large this year. The average refund increased 14 percent from $2,791 in 2021, to $3,176 in 2022.

All taxpayers may claim the standard deduction. Small adjustments are made to that figure each year, but 2022 saw a larger increase than usual. The standard deduction for married couples filing jointly increased by $1,800 to $27,700, and $900 for single taxpayers or married individuals filing separately.

"Some of those things are tied to inflation, so since inflation is higher, we saw a bigger increase there, which should help folks," said Barry Bowers, Certified Public Accountant with Spectrum CPA Partners in Great Bend. "The tax brackets are expanded because of that, too, which again should help people. It's not going to be huge differences, but at least it will work in everyone's favor. This might be one thing that's good from all the inflation we've been experiencing."

The child tax credit and child and dependent care tax credit are also reduced for 2022, returning to pre-COVID levels. For 2021, the child tax credit offered $3,600 for children under six years of age, and $3,000 for each child between the ages of 6-17. Those numbers revert back to $2,000. Bowers said that change should not drastically alter refunds from a year ago for those taking payments in advance, then receiving the other half on their tax return.

"The people it will affect the most are the folks that opted out of those advanced payments or didn't get them for some reason, then they got that whole $4,000 on their returns," he said. "They're going to see some differences."

Third-party payments through apps like Venmo or PayPal were expected to be an additional item for 2022. While businesses have had to report transactions for several years, prior to 2022, individual taxpayers only had to report transactions totaling more than $20,000. The IRS reduced that figure to just $600 for 2022. Transactions of more than that may result in a 1099-K form, though Bowers said because of pushback with difficulties reconciling things like simple money transfers, deposits at hotels, and tips at restaurants, many will not receive a 1099-K until next year.

"I think it would be a good idea, if somebody is using those, to look at their setup and see if there a place to mark it personal versus not, so maybe that will help eliminate some issues a year from now if they try to enforce it then," he said.

According to the IRS, the fastest way for taxpayers to collect their refund is to file electronically and choose the direct deposit option for payment.