At Maicher CPA Pllc, we provide a full range of tax preparation services to help businesses and individuals succeed. Each year, the IRS provides tax inflation adjustments for numerous tax provisions. Below are inflation adjustments for tax year 2022 concerning several key tax provisions of concern to many of our clients at Maicher CPA Pllc.
- The “marginal tax rate” is the tax rate incurred on each additional dollar of income. It’s important to know this rate because it will help you to properly adjust your W-2 withholding taxes, or your tax estimates if you’re self- employed. The top tax rate is 37% for individual single taxpayers with incomes greater than $539,900 ($647,850 for married couples filing jointly). The other rates are:
35%, for incomes over $215,950 ($431,900 for married couples filing jointly)
32% for incomes over $170,050 ($340,100 for married couples filing jointly)
24% for incomes over $89,075 ($178,150 for married couples filing jointly)
22% for incomes over $41,775 ($83,550 for married couples filing jointly)
12% for incomes over $10,275 ($20,550 for married couples filing jointly)
- The “standard deduction” is a specific dollar amount that reduces the amount of income which is taxed. Taxpayers may choose either the standard deduction or itemized deduction, discussed below, but usually choose whichever results in the lesser amount of tax payable. The standard deduction for: (a) married couples filing jointly is $25,900, (b) single taxpayers and married individuals filing separately is $12,950, and (c) heads of households is $19,400.
- An “itemized deduction” is an expense that can be subtracted from adjusted gross income to reduce taxable income and to therefore lower the amount of taxes payable. Itemized deductions include amounts you paid for state and local income or sales taxes, real estate taxes, personal property taxes, mortgage interest, retirement account contributions, gifts and other items. Examples of adjustments in deductions for 2022, include: (a) contributions to 401(k), 403(b) and most 457 plans are increased to $20,500 and (b) the gift exclusion is increased to $16,000.
Takeaway: Knowing the above tax rates and amounts allows better decisions about the proper amount of withholding taxes and estimated payments in your case as well as whether itemizing is better than claiming a standard deduction. At Maicher, our accountants provide tax return services tailored to the unique needs of individuals and businesses. Contact us today for an appointment to prepare your 2021 return and to plan your 2022 tax strategy.