Davis Tax Services, LLP

Tax planning, preparation & problem resolution

A few highlights of tax provisions for 2022:

Standard deductions
Standard deductions and tax brackets rose with Cost of Living Adjustments (COLAs). Standard deductions are $13,850 for single filers, $20,800 for heads of household and $27,700 for married couples filing jointly.
Taxpayers age 65 or older get an additional $1,750 standard deduction, $1,400 each for married taxpayers.
Special $300 tax deduction for charitable contributions
The $300 federal deduction for charitable contributions if you don't itemize is gone for 2022. However, Arizona still has an additional 25% deduction for nonitemizers.
And don't forget the dollar-for-dollar Arizona tax credit charities. For most, you can donate up to Apr. 15 and deduct on last year's return. Find out more at Arizona Tax Credits page.
Pandemic relief that disappeared for 2022
Several COVID relief tax breaks expired for 2022. Among those provisions that returned to pre-American Rescue Plan levels:
  • Child Tax Credit
  • Child and Dependent Care Credit
  • Earned Income Credit
Required minimum distributions
Required minimum distributions (RMD's) are back for IRA's, 401(k)s and other tax-advantaged retirement accounts. The age to start taking RMD's was 72 in 2022 rather than 70½, and rose to age 73 in 2023 for those who haven't yet started taking RMD's. The table to calculate the distributions has been revised, lowering required amounts and allowing more money to stay in retirement plans.
Also, the age limit for contributions is gone. If you are still working, you now may contribute to an IRA even if you are required to take RMD's.
Clean energy credits
The 2022 Inflation Reduction Act turbocharged the Clean Vehicle Credit -- although strict rules may mean that many electric vehicles (EV's) won't qualify for 2022.
The credit is up to $7,500 for new EV's and $4,000 for used EV's. Vehicles have to be built in the United States with largely American parts.
Home energy credits and solar equipment increased increased to 30% of cost. Also, the lifetime cap on residential energy credits has been replaced with a yearly limit of $1,200.
As Bitcoin and other "cryptocurrency" investing grows, IRS is looking to track it. If you had any cryptocurrency transactions, make sure you include those records with your tax documents.
Arizona moves toward flat tax
Arizona started transitioning from a "progressive" tax (where higher income people pay a higher tax rate) to a "flat" tax (where everybody pays the same tax rate). For 2022, Arizona has only two tax rates, down from four in 2021. For more details, see Arizona Tax News