JANUARY is the start of income tax filing once again. It is due on or before April 15, 2023. However, due to the natural disaster caused by the so-called atmospheric-river storm that battered California, the Internal Revenue Service just announced that your tax filing can be extended to May 15 for counties covered by a federal emergency declaration — to file their income tax returns for 2022. Among the counties included are Los Angeles, Orange, Ventura and San Diego and the rest of several beleaguered counties.
But we don’t have to wait if we can do it now to get it out our way.
And if you have a tax-exempt non-profit organization, the tax filing for both federal and state agencies is from January to May 15 if you are on a calendar year. If you file on a fiscal year, your entities’ tax return is filed within five months after the end of your fiscal period.
Here are the salient pointers to consider in filing our tax returns. We need the figures of all our income from all sources that are listed in our W-2s, 1099s, IRA/Pension distributions, social security benefits, capital gains, dividends, interests, unemployment compensations, lotto and gambling winnings, business income, personal property rental income, stock options, among others.
The next important information are our deductions, exemptions, withholding taxes, property taxes, mortgage interest, dependents that you claim like your minor or qualifying children, parents whom you provide more than half of their support, gifts to charities, etc. And whatever is more beneficial to us, the tax software will choose it for us whether it’s standard or itemized deductions.
Shown below are some of the updates that I want to share with you. And due to some space constraints, I will mention some of them, then continue it in our next issues.
Earned Income Tax Credit
What is an Earned Income Tax Credit (EITC)? It is a refundable tax credit for low to moderate-income working individuals and couples, particularly those with children. The amount of EITC benefit depends on a recipient’s income and number of children — to get a tax break. The main requirement is that you must earn money from a job. If you qualify, your refunds might increase or it can eliminate federal taxes you owe.
The minimum age to collect EITC for a taxpayer without a qualifying child is 25 and below 65 which is the same as pre-2021 rules.
The maximum amount of EITC to be reimbursed for a single taxpayer without children is $560 in 2022. This is a significantly lower amount than in 2021. The Adjusted Gross Income for a single filer or Head of Household to claim EITC without a qualifying child is $16,480.
Taxpayers must use their 2022 earned income to claim the credit.
Taxpayers filing Married Filing Separately that are separated from their spouse and living apart for the last six months of the year may be eligible for EITC if they have a qualifying child that lived with them for at least six months out of the year.
No Recovery Credit On Tax Year 2022
The Recovery Rebate Credits or Stimulus Refunds were authorized by Congress to address the Coronavirus pandemic and were issued in 2020 and 2021.
No recovery rebate credit was authorized for 2022 and the taxpayer cannot claim any Recovery Rebate Credit on the 2022 tax return.
Child Tax Credit Provisions
What is Child Tax Credit? It is a tax break a tax filer can take for qualifying children to offset the costs of raising kids.
In 2022, the Child Tax Credit is $2,000 for each qualifying child under age 17 that is claimed as a dependent on the tax return. If you are above 17, you are not eligible for the CTC.
The refundable portion of the Child Tax Credit for additional child is up to $1,500 for each qualifying child. The refundable amount has been increased over the 2020 amount because the refundable portion of the CTC is adjusted based on changes in the US Chained Consumer Price Index.
To receive the Additional Child Tax Credit, the taxpayer must have an earned income. This is the same calculation that existed in 2020.
Child Tax Credit is phased out if the Taxpayer’s Adjusted Gross Income is more than the following:
- $400,000 for Married Filing Jointly. • $200,000 for all other filing statuses
Should you have inquiries, you can reach me at 562-508-8099 or email at [email protected]
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