1. Inflation Reduction Act of 2022 and Economic impact payment
Inflation reduction Act of 2022:
The Inflation Reduction Act changed a wide range of tax laws.
Since the Inflation Reduction Act is a 10-year plan, the changes won't happen immediately. We're continue to track the law and update the credit or change for you.
Economic impact payment:
The IRS has issued all first, second and third Economic Impact Payments. You can no longer use the Get My Payment application to check your payment status from IRS website.
Most eligible people already received their Economic Impact Payments. However, people who are missing stimulus payments should review the information from IRS website side “sign in to your Online account” to determine their eligibility to claim a Recovery Rebate Credit for tax year 2020 or 2021. https://www.irs.gov/coronavirus/economic-impact-payments
No additional stimulus payments for 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.
2. ITIN - Renew expiring tax ID numbers and Non-resident Alien:
Renew expiring tax ID numbers:
An ITIN is a tax ID number used by any taxpayer (for example, foreigner who owns US property and has rental income in USA or dependent such as spouse (does not need to live with taxpayer or your child who lives with taxpayer more than 183 days for calendar year) who doesn't qualify to get a Social Security number.
Some ITINs must be renewed. If you haven't used your ITIN on a U.S. tax return at least once for tax years 2019, 2020, or 2021, it expired at the end of 2022 and must be renewed if you need to file a U.S. federal tax return in 2023. You don't need to renew your ITIN if you don't need to file a federal tax return. We are Certified Acceptance Agents (CAA) and we are able to help to apply or renew ITIN for you with right documents to IRS. You don’t need to travel to IRS office by yourself for your spouse/dependents, or submit original passport to IRS.
Nonresident alien: (see our checklist last page to determine if you are tax residence or not).
If you are a nonresident alien and earn wages subject to U.S. income tax withholding, your 2022 U.S. income tax return Form 1040NR is due by: April 18, 2023. If you don't earn wages subject to U.S. income tax withholding, your return is due by: June 15, 2023. If you are a U.S. citizen or resident; and on the due date of your return that you are living outside the United States and Puerto Rico, and your main place of business or post of duty is outside the United States and Puerto Rico; OR if you are in military or naval service on duty outside the United States and Puerto Rico, you are allowed an automatic 2-month extension without filing form 4868 (until June 15, 2023). However, if you pay the tax due after the regular due date (April 18, 2023) interest will be charged from that date until the date the tax is paid in full.
3. New lines 1a through 1z on Form 1040 & Schedule 1. and New line 6c
Form 1040 Line 1a through 1z: This year, line 1 is expanded and there are new lines 1a through 1z.
Form 1040 Schedule 1: Some amounts that in prior years were reported on Form 1040 are now reported on Schedule 1. • Scholarships and fellowship grants are now reported on Schedule 1, line 8r. • Pension or annuity from a nonqualified deferred compensation plan or a nongovernmental section 457 plan are now reported on Schedule 1, line 8t. • Wages earned while incarcerated are now reported on Schedule 1, line 8u.
Filing status name changed to qualifying surviving spouse.
The filing status qualifying widow(er) is now called qualifying surviving spouse. The rules for the filing status have not changed. The same rules that applied to qualifying widow(er) apply to qualifying surviving spouse.
4. Child Tax credit (CTC) and Child and dependent care expense
The many changes to the child and dependent care expense AND child tax credit (CTC) implemented by ARP were not extended after 2021.
Credit for child and dependent care expenses.
The changes to the credit for child and dependent care expenses implemented by the American Rescue Plan Act of 2021 (ARP) were not extended. For 2022, the credit for the child and dependent care expenses is nonrefundable. The dollar limit on qualifying expenses is $3,000 for one qualifying person and $6,000 for two or more qualifying persons. The maximum credit amount allowed is 35% of your employment-related expenses.
Child tax credit (CTC) and additional child tax credit (ACTC).
For 2022,
• The credit amount of the CTC is $2,000 for each qualifying child.
• The amount of CTC that can be claimed as a refundable credit is limited as it was in 2020, except the maximum additional child tax credit amount (ACTC) has increased to $1,500 for each qualifying child.
• A child must be under age 17 at the end of 2022 to be a qualifying child.
• The credit amount begins to phase out where modified adjusted gross income exceeds $200,000 ($400,000 in the case of a joint return)
• Advance child tax credit payments. Advance child tax credit payments have not been issued for 2022
5. Two credits are not avaliable for 2022
Credits for sick and family leave for certain self-employed individuals are not available. The credit for sick and family leave for certain self-employed individuals were not extended and you can no longer claim these credits.
Health coverage tax credit is not available. The health coverage tax credit was not extended. The credit is not available after 2021.
Student loan forgiveness. The eligibility for student loan forgiveness has been expanded under the authority granted by the Higher Education Relief Opportunities for Students Act of 2003. Borrowers with annual income during the pandemic of under $125,000 (for individuals) or under $250,000 (for married couples or heads of households) who received a Pell Grant in college will be eligible for up to $20,000 in debt cancellation. Borrowers who met those income standards but did not receive a Pell Grant will be eligible for up to $10,000 in relief.
6. Form 1099-K, Payment Card and Third-Party Network Transactions.
1099-K is an IRS information return used to report certain payment transactions to improve voluntary tax compliance. You should receive Form 1099-K by January 31 if, in the prior calendar year, you received payments:
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From all payment card transactions (e.g., debit, credit, or stored-value cards), and
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In settlement of third-party payment network transactions above the minimum reporting thresholds as follows:
NOTE:
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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).
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If you received a Form 1099-K that shows payments you didn’t receive or is otherwise incorrect, contact the Form 1099-K issuer. Don’t contact the IRS; the IRS can’t correct an incorrect Form 1099-K. If you can’t get it corrected, or you sold a personal item at a loss, we will help to take care it on your tax return for some cases.
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.
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For returns for calendar years prior to 2023:
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Gross payments that exceed $20,000, AND
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More than 200 such transactions
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7. Credits for New Electric Vehicles Purchased in 2022 or Before
If you bought a new, qualified plug-in electric vehicle (EV) in 2022 or before, you may be eligible for a clean vehicle tax credit up to $7,500 under Internal Revenue Code Section 30D.
Credits for New Clean Vehicles Purchased in 2023 or After:
You may qualify for a credit up to $7,500 under Internal Revenue Code Section 30D if you buy a new, qualified plug-in EV or fuel cell electric vehicle (FCV). The Inflation Reduction Act of 2022 changed the rules for this credit for vehicles purchased from 2023 to 2032.
The credit is available to individuals and their businesses.
To qualify, you must:
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Buy it for your own use, not for resale
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Use it primarily in the U.S.
In addition, your modified adjusted gross income (AGI) may not exceed:
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$300,000 for married couples filing jointly
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$225,000 for heads of households
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$150,000 for all other filers
You can use your modified AGI from the year you take delivery of the vehicle or the year before, whichever is less. If your modified AGI is below the threshold in 1 of the two years, you can claim the credit.
The credit is nonrefundable, so you can't get back more on the credit than you owe in taxes. You can't apply any excess credit to future tax years