Page 11 - Supplement to 2022 Income Tax

Estimating Your 2022 Taxes

income exceeds the breakpoint, the 0% rate rather married persons filing separately. The 26% AMT rate
than the 15% rate might still apply to a portion of applies to the first $206,100 of 2022 taxable income
the gains/dividends, depending on how much of the (AMTI minus exemption), or $103,050 if married
taxable income consists of ordinary income and how filing separately, and the 28% rate applies to the excess
much is long-term gain plus qualified dividends; this over $206,100/$103,050.
will be figured on the IRS capital gains rate worksheet.
The breakpoint between the 15% and 20% rate is Adoption credit and employer adoption assistance
$517,200 if married filing jointly or a qualifying widow/ (pages 57, 67–68, 526–528). The maximum adoption
widower, $488,500 if a head of household, $459,750 credit for 2022 is $14,890. The credit will phase
if single, or $258,600 if married filing separately. Even out if MAGI exceeds $223,410, and the phaseout is
if taxable income exceeds the breakpoint, the 20% rate complete if MAGI is $263,410 or more. The same
does not necessarily apply to the gains/dividends. If limit and phaseout rules apply to the employee
ordinary income is only a small part of taxable income, exclusion for benefits under an employer’s adoption
the 15% or even the 0% rate may apply to some of the assistance program.
gains/dividends; this will be figured on the IRS capital
gains rate worksheet. Child tax credit and credit for other dependents (pages
The 15% or 20% rate is increased by the 3.8% tax 515–518). The maximum child tax credit amount
on net investment income if MAGI exceeds $250,000 is set to revert to the pre-2021 limit of $2,000 per
if married filing jointly or a qualifying widow/ qualifying child. For 2022, the maximum amount of
widower, $200,000 if single or head of household, or the credit that is refundable is the pre-2021 limit of
$125,000 if married filing separately. If this threshold $1,400 per qualifying child.
is exceeded, the 3.8% tax applies to the lesser of the The gross income limit for a qualifying relative for
taxpayer’s net investment income, or the MAGI over the $500 nonrefundable credit for other dependents is
the threshold. $4,400 (up from $4,300 in 2021).

First-year expensing (pages 738–740). For 2022, Health FSA salary reduction (pages 78–82). The 2022
the expensing limit increases to $1,080,000 and the limit on salary-reduction contributions to a health
limit is phased out when qualifying purchases exceed flexible spending arrangement is $2,850 (up from
$2,700,000. Thus, no expensing will be allowed if $2,750 in 2021). The maximum carryover amount
purchases are $3,780,000 or more. from 2022 to 2023 is $570.

Qualified business income (QBI) deduction (pages 608, Educator expenses (page 345). The maximum above-
721–722). For 2022, the taxable income threshold the-line deduction for educator expenses is $300 for
above which the QBI deduction may be reduced or 2022 (up from $250 in 2021).
eliminated is $340,100 if married filing jointly and
$170,050 for all other filers. Exclusion for interest on savings bonds used for tuition
(pages 619–621). The exclusion for interest on Series
Kiddie tax (pages 508–513). For 2022, a child’s EE and I bonds redeemed to pay higher education
investment income over a $2,300 floor (up from $2,200 expenses will start phasing out for married couples
in 2021) is taxed at the parent’s top marginal rate. filing jointly with 2022 MAGI over $128,650, and
the phaseout is complete if MAGI is $158,650 or
AMT exemption amounts and breakpoint between 26% more. For single taxpayers, heads of households, and
and 28% rates (pages 500–507). The AMT exemption qualifying widows/widowers, the phaseout begins
amounts for 2022 are increased to $118,100 for married when MAGI exceeds $85,800 and is complete at
couples filing jointly and surviving spouses, $75,900 MAGI of $100,800 or more. Married persons filing
for singles and heads of households, and $59,050 for separately are not eligible for the exclusion.

Supplement to J.K. Lasser’s Your Income Tax 2022 | 9