JD CPA PC

JD CPA PC As a full-service accounting firm, we are dedicated to crafting solutions for our clients’ complex

It can be a lot to navigate all of the changes that seem to be constantly shifting. It’s easy to feel overwhelmed and wo...
08/31/2022

It can be a lot to navigate all of the changes that seem to be constantly shifting. It’s easy to feel overwhelmed and wonder if you’re missing a credit or accidentally claiming something incorrectly. This is why we highly recommend hiring a CPA to do this “dirty work” for you. Besides our education and continuing training and research, we stay up-to-date with laws and changes to make sure we accurately file for you with the information you provide us. Reach out to us today for a consultation and get on our schedule for tax season before the season officially hits!

Thanks to skyrocketing gas prices, the IRS took the unusual step of adjusting the standard mileage rates for 2022 in the...
08/30/2022

Thanks to skyrocketing gas prices, the IRS took the unusual step of adjusting the standard mileage rates for 2022 in the middle of the year. Therefore, the rates applicable during the first half of the year are different than the rates used for the second half. The mileage rates are used to calculate tax deductions for the use of an automobile (i.e., a car, pickup truck, or van) for business purposes, medical-related travel, and moving expenses for active-duty members of the military. From January 1 to June 30, the 2022 standard mileage rate for business driving is 58.5¢ per mile (56¢ per mile in 2021). The mileage allowance for medical travel and military moves for the same time span is 18¢ per mile (16¢ per mile in 2021). From July 1 to December 31, the 2022 mileage rate for use of an automobile for business purposes rises to 62.5¢ per mile. The standard rate for medical-related driving and military moving expenses jumps to 22¢ per mile for the second half of 2022.

The annual cap on deductible contributions to health savings accounts (HSAs) rose in 2022 from $3,600 to $3,650 for self...
08/28/2022

The annual cap on deductible contributions to health savings accounts (HSAs) rose in 2022 from $3,600 to $3,650 for self-only coverage and from $7,200 to $7,300 for family coverage. People born before 1968 can put in $1,000 more (same as for 2021).

For 2022, the limit on employee contributions to a healthcare flexible spending account (FSA) is $2,850, which is $100 more than the 2021 limit. If the employer's plan allows the carryover of unused amounts, the maximum carryover amount for 2022 is $570 ($550 for 2021). On the other hand, workers can't contribute as much to a dependent care FSA in 2022 as they could in 2021. Last year, as a COVID-relief measure, a family could sock away up to $10,500 in a dependent care FSA without paying tax on the contributions. But for 2022, the normal limit of $5,000-per-year on tax-free contributions applies once again.

For people who are still saving for retirement, many key dollar limits on retirement plans and IRAs are higher in 2022. ...
08/27/2022

For people who are still saving for retirement, many key dollar limits on retirement plans and IRAs are higher in 2022. For example, the maximum contribution limits for 401(k), 403(b) and 457 jumps from $19,500 to $20,500 for 2022, while people born before 1973 can once again put in $6,500 more as a "catch-up" contribution. The 2022 cap on contributions to Simple IRAs is $14,000 ($13,500 in 2021), plus an extra $3,000 for people age 50 and up. The 2022 contribution limit for traditional IRAs and Roth IRAs stays steady at $6,000, plus $1,000 as an additional catch-up contribution for individuals age 50 and up. However, the income ceilings on Roth IRA contributions went up. Contributions phase out in 2022 at adjusted gross incomes (AGIs) of $204,000 to $214,000 for couples and $129,000 to $144,000 for singles (up from $198,000 to $208,000 and $125,000 to $140,000, respectively, for 2021).

The "above-the-line" deduction for up to $300 of charitable cash contributions ($600 for a married couple filing a joint...
08/25/2022

The "above-the-line" deduction for up to $300 of charitable cash contributions ($600 for a married couple filing a joint return) expired at the end of 2021. As a result, it isn't available for the 2022 tax year (it was available for 2020 and 2021). Only people who claimed the standard deduction on their tax return (rather than claiming itemized deductions on Schedule A) were allowed to take this deduction. The 2020 and 2021 suspension of the 60%-of-AGI limit on deductions for cash donations by people who itemize also expired, so the limit is back in place starting with the 2022 tax year.

Starting with the 2022 tax year, third-party payment settlement networks (PayPal, Venmo, Zelle) will send you a Form 109...
08/24/2022

Starting with the 2022 tax year, third-party payment settlement networks (PayPal, Venmo, Zelle) will send you a Form 1099-K if you are paid over $600 during the year for goods or services, regardless of the number of transactions. Previously, the form was only sent if you received over $20,000 in gross payments and participated in more than 200 transactions. The gross amount of a payment doesn't include any adjustments for credits, cash equivalents, discount amounts, fees, refunded amounts, or any other amounts. This change to the reporting threshold means more people than ever will get a 1099-K form next year that they will use when filling out their income tax returns for the 2022 tax year. However, remember that 1099-K reporting is only for money received for goods and services. It doesn't apply to payments from family and friends.

The standard deduction amounts were increased for 2022 to account for inflation. Married couples get $25,900 ($25,100 fo...
08/22/2022

The standard deduction amounts were increased for 2022 to account for inflation. Married couples get $25,900 ($25,100 for 2021), plus $1,400 for each spouse age 65 or older ($1,350 for 2021). Singles can claim a $12,950 standard deduction ($12,550 for 2021) — $14,700 if they're at least 65 years old ($14,250 for 2021). Head-of-household filers get $19,400 for their standard deduction ($18,800 for 2021), plus an additional $1,750 once they reach age 65 ($1,700 for 2021). Blind people can tack on an extra $1,400 to their standard deduction ($1,350 for 2021). That jumps to $1,750 if they're unmarried and not a surviving spouse ($1,700 for 2021).

Tax rates on long-term capital gains (gains from the sale of capital assets held for at least one year) and qualified di...
08/21/2022

Tax rates on long-term capital gains (gains from the sale of capital assets held for at least one year) and qualified dividends did not change for 2022. However, the income thresholds to qualify for the various rates were adjusted for inflation. In 2022, the 0% rate applies for individual taxpayers with taxable income up to $41,675 on single returns ($40,400 for 2021), $55,800 for head-of-household filers ($54,100 for 2021) and $83,350 for joint returns ($80,800 for 2021). The 20% rate for 2022 starts at $459,751 for singles ($445,851 for 2021), $488,501 for heads of household ($473,751 for 2021) and $517,201 for couples filing jointly ($501,601 for 2021).

Although the tax rates didn't change, the income tax brackets for 2022 are slightly wider than for 2021. The difference ...
08/19/2022

Although the tax rates didn't change, the income tax brackets for 2022 are slightly wider than for 2021. The difference is due to inflation during the 12-month period from September 2020 to August 2021, which is used to figure the adjustments.

Remember those stimulus checks last year? For those people who didn’t receive their third stimulus check or got less tha...
08/18/2022

Remember those stimulus checks last year? For those people who didn’t receive their third stimulus check or got less than what they should have in 2021, relief was available in the form of a tax credit known as the recovery rebate credit. However, there are no stimulus check payments in 2022. As a result, there is no recovery rebate credit for the 2022 tax year.

More workers without qualifying children were able to claim the earned income tax credit (EITC) on their 2021 tax return...
08/16/2022

More workers without qualifying children were able to claim the earned income tax credit (EITC) on their 2021 tax return, including both younger and older Americans. The "childless EITC" amounts were higher, too. However, once again, those enhancements expired at the end of last year. Without the 2021 improvements in place, the minimum age for a childless worker to claim the EITC jumps back up to 25 for 2022 tax returns (it was 19 in 2021). The maximum age limit (65 years of old), which was eliminated for the 2021 tax year, is also back in play for 2022. The maximum credit available for childless workers also plummets from $1,502 to $560 for the 2022 tax year. Expanded eligibility rules for former foster youth and homeless youth that applied for 2021 are dropped as well. In addition, the rule allowing you to use your 2019 earned income to calculate your EITC if it boosted your credit amount no longer applies.

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