"The IRS has implemented several changes that may impact your tax return for 2022,” said BluPeak Senior Vice President and Chief Risk Officer Charlie Williams. “Tax payers should be aware of these changes as they get down to filing their taxes."
SAN DIEGO (PRWEB) March 29, 2023
The April 18th tax deadline is fast approaching and for those who haven’t filed their 2022 taxes yet, there are some important updates to keep in mind. BluPeak Credit Union has compiled some of the most notable revisions, including deadline extensions for some Californians in the wake of severe winter weather, as well as changes to tax-credit rules, and the introduction of reporting requirements for business transactions on apps like Venmo™ and Paypal™.
“The IRS has implemented several changes that may impact your tax return for 2022,” said BluPeak Senior Vice President and Chief Risk Officer Charlie Williams. “Tax payers should be aware of these changes as they get down to filing their taxes. You may receive your refund faster if you file your tax return before the deadline, allowing you to put that money into a savings account or term certificate with today’s relatively higher interest rates. You will also reduce this type of identity-theft risk since filing your tax return early gives identity thieves less time to file a fraudulent return in your name.”
Deadlines extended for Californians
To help alleviate some of the hardships many Californians have faced due to this winter’s intense storms, both the IRS and the state’s Franchise Tax Board have extended the tax filing and payment deadlines for individuals and businesses in affected areas to October 16, 2023.
Changes to tax-credit rules
The American Rescue Plan Act, enacted in 2021, temporarily increased certain tax credits and added a special rule for charitable deductions. With these programs now ending, you should check eligibility rules and deduction amounts to see what's currently available. As outlined by Experian, some changes to keep in mind include:
- Child tax credit: In 2021, you may have received up to $3,600 per eligible child, half of which was sent as monthly advance payments. In 2022, the Child Tax Credit returns to its 2019 maximum: up to $2,000 per qualifying child.
- Child and dependent-care credit: In 2021, this credit topped out at $8,000. In 2022, the maximum is $2,100.
- Earned-income tax credit: In general, these credits are lower than last year. For details on new income eligibility and credits for 2022, it’s best to check with the IRS.
- Premium tax credit: For those who purchased health insurance through the health insurance marketplace in 2022, the American Rescue Plan Act temporarily expanded eligibility for this credit by including taxpayers with household incomes 400% above the federal poverty line.
- Clean-energy vehicle credit: Tax credits of up to $7,500 are still available for qualifying electric and plug-in hybrid vehicles but eligibility rules changed with the passage of the Inflation Reduction Act in 2022. Before claiming the credit, EV owners should check to make sure their vehicle purchase qualifies.
- Charitable donations: In 2021 only, these types of donations were deductible as a separate line item, even if you took the standard deduction. This year, you'll have to itemize each of your donations if you want to claim a deduction for charitable giving.
Pause on business payments by app
If you run a business and rely on apps like Venmo and Paypal as a way for customers to pay you, you likely heard about a new law that will require third-party payment companies to report transactions to the IRS using Form 1099-K. This would apply to business-account holders on the apps who received at least $600 in payments in 2022—up from the threshold of $20,000 in 2021.
Businesses on these payment platforms aren’t required to report income from a 1099-K form for the 2022 tax year. However, you must still report on your tax return income any money received from self-employment, gig work, sales of goods or other business transactions.
Best practices to implement when filing taxes
- Start early. The first step in filing your taxes every year is gathering all the official IRS forms sent to you by your employer, financial institutions, tax boards and other entities. In most cases, the deadline for these organizations to send out these forms for 2022 tax reporting was January 31. If you haven’t started your tax filing yet, it’s time to track down those forms and other wage statements.
- Go digital. Taxpayers and tax professionals are encouraged to file their returns electronically to avoid both potential mail delays and slow paperwork processing due to staffing shortages. Setting up direct deposit with the IRS will speed up the delivery of any refund due back to you.
- Be accurate. Discrepancies on your tax return are a common trigger for an IRS audit and delay your refund. If the information you provide differs from what the agency has on file, it may be flagged for manual review. You can prevent inaccuracies by requesting a digital copy of your tax transcript through the IRS website.
- Fund Your IRA. Though 401(k) contributions were due by the end of 2022, you have until April 18 of this year to contribute to a traditional IRA or a Roth IRA. Making a deductible contribution helps you lower your tax bill by reducing your taxable income while contributing to a tax-deferred IRA account. To qualify for the full annual deduction on a traditional IRA, you (and your spouse, if filing jointly) must:
-Not be eligible to participate in a company retirement plan
-Be eligible but have an adjusted gross income of $68,000 individually or $109,000 or less as a married couple filing jointly
About BluPeak Credit Union
Founded in 1936, BluPeak Credit Union empowers its nearly 60,000 members to achieve financial wellness through a full range of financial products and services, including checking and savings options, credit cards, loans, mortgages and more. BluPeak has more than $1.2 billion in assets and members can access their accounts through six California branches, nearly 30,000 surcharge-free ATMs nationwide, and 24/7 online and mobile banking.
BluPeak membership is open to all Californians who live, work or worship in Alameda, Sacramento, San Diego, Santa Clara and Yolo counties, as well as those employed by the state of California, and California university employees and students. Formerly known as University & State Employees Credit Union (USECU), the name changed to BluPeak in 2022. The new name reflects BluPeak’s California roots and is more inclusive to its field of membership.
As a purpose-driven financial institution, BluPeak supports access to clean water as a means of bridging socioeconomic gaps and providing aid to those in need. It has committed to donating 1% of its 2023 revenues to water-related causes. Learn more at http://www.blupeak.com.