 Internal Revenue Service R.R.S. Tax News. Fielers should know about changes to common credits and deductions. It's true we need to keep up with the rapid changes these days, man. Otherwise, stuff starts sounding stupid. I mean, take Women's History Month, for example. Like, it's good in concepts. But to my modern ear, it sounds ridiculous. I mean, how could it be Women's History Month? Women's History? I mean, it's like even a woman's story is somehow his story for crying out loud. As if men own all the stories. Dang, patriarchy. I mean, honestly, like, everyone knows it can't be his story if a woman's telling it. Unless the guy's wearing, you know, like a dress at the time. Or if like, if like the dude's taking a leak in the, in like a public woman's restroom while standing up and offering a tampon to the woman in the stall next door, something like that, that would be okay. But otherwise, it's unacceptable in our enlightened age. However, the dude wearing a dress exception does mean that it is okay to celebrate Women's History Month by watching the movie Braveheart. You're so concerned with squabbling for the scraps from Longshank's table that you've messed your God-given right to something better. Which is, you know, that's interesting. But anyways, the point is, like, I propose we replace the term his story with the term she's story, or they them story, or possibly kitten, kitten self story, or something less, you know, something less patriarchal. So, so this month should more properly be called Women's They Them Story Month. They Them Story, possibly being the most acceptable choice, considering many of the women being celebrated, you know, are actually men. Hey, hey, that's, that's a way to fix the pay gap, man. Like, like if, if we could just create an incentive structure where men could get ahead by calling themselves women, and then we can use equity policies to pay that distinct group tons of money based on, you know, the woman claim thing. And that way we could not only eliminate the gender pay gap, we could reverse it, man, nor woman, or they, or they them. Anyways, that would work. That would work at least up until the point where the lack of hiring based on merit causes us to decline so badly, you know, that China destroys us or something like that, at which point we'll all be equally and equitably poor. So the two terms will actually and truly be basically interchangeable at that time. But you know, on the plus side, on the plus slide, you know, at least we know it's safe to chow down on those, on those wet market bats now. So we've got that going for us, which is nice. He's going to stiff me. And I say, hey, Lama, hey, how about a little something, you know, pretty effort, you know. And he says, oh, there won't be any money. But when you die on your deathbed, you will receive total consciousness. So I got that going for me, which is nice. Tax tip 2023-34, March 15, 2023. Taxpayers who haven't filed yet should make sure they're familiar with the changes to credits and deductions for tax year 2022 to help them file an accurate return by the April 18, 2023 deadline. Unlike 2020 and 2021, there were no new stimulus payments for 2022. So taxpayers should not expect to get an additional payment in their 2023 tax refund. So obviously when the COVID situation was happening, there were a lot of changes to the tax code. Many of those changes were trying to increase the cash flow, money going out, one of them being the stimulus check. At some point in time, they've got to cut that off. And now we're experiencing that side of the situation here. So some of that stuff that was happening before, they're going to have to roll it back and that's what's happening now. So changes to individual credits and deductions for tax year 2022. Taxpayers may still qualify for temporary expanded eligibility of the premium tax credit. There's a link to that here. A refundable credit that helps eligible individuals and families cover the premiums for their health insurance purchase through the health insurance marketplace. Now the health insurance marketplace was that whole thing was took place and was implemented before the whole COVID thing happened. And that kind of was tied to the Obamacare situation, where the idea was people were going in two opposite directions to try to fix this health care situation. One group of people said that we need to completely kind of centralize the whole health care thing and force everybody to have insurance because that way we can eliminate the free rider type of situation. People getting health care without actually paying for the insurance. That's where the Obamacare kind of plan what was going into place. And the other side was saying, well, what we really need to do is have more market based stuff in place so that we can allow more competition and whatnot. Instead of reducing the competition and trying to control everything from a top down kind of system because that usually limits innovation and that kind of stuff. And then of course we went in the middle. Instead of getting on one side of the road and the other side of the road, we sat in the middle of the road, which is usually where you get hit by the truck. And that's kind of... So now we have a situation where there's a health care kind of marketplace situation, but it's only for certain individuals. Usually a load of moderate income individuals and then it's tied to a credit, but it's not really forcing everybody to be on health care. So we're not kind of eliminating that free rider thing. So if you're participating in the marketplace, then there's this advanced credit that you might be able to get an advanced credit. Not the money for the advanced credit, but the advanced credit might be used to pay down your health insurance premiums if you qualify. And then when you actually do your tax return, your tax return is more complex because now you already consumed the credit that you're assuming to have, which you will only will have if your income is below a certain threshold. So then you've got to figure out what the actual credit is and see if you owe more money or if you get more credit at the point in time you pay the taxes. So to get this credit, taxpayers must meet certain requirements. There's a link to that here and file a tax return with form 8962 premium tax credit. Then you got the child tax credit, the earned income credit and the child and dependent care credit have reverted to pre-COVID levels. So these were other, these are typical kind of credits or the main credits for low to moderate income individuals which have a refundable component to them, which means that even if your tax liability goes below zero, you might get a benefit from these credits. Now they supercharged these credits, especially the child tax credit during COVID where they basically gave a prepayment of the credit and they increased the credit immensely and so on. And once again, it's unsustainable to have that happen and you've got to imagine that some of this money going out in these different ways led to in part or at least contributed to this inflation everything that we have now. So and to my perspective, I'm not sure. I think people are actually going to end up at a longer term detriment because the added money actually disincentivized people to work, although it could have helped a lot of people too, but I think it's going to in the long run disincentivize people to work, which means it's going to be harder to get back in the workforce. And then now we're going to be dealing with long term inflation, which I think over the long term will outpace the short term benefits people got when they got the stimulus payments and probably just spent the stimulus payments, you know, thinking that, you know, not playing it on the inflation. So I'm not sure that, so at some point, they got to roll this stuff back. Otherwise you're going to end up with out of control inflation going forward, which is, of course, the thing that we are in right now, which was seemed to me to be inevitable result of the policy. It's just a matter of is the short term relieving of the pain worthwhile for the for the added long term, you're going to you're going to experience more long term pain in order to relieve the short term pain. Is that is that a good trade off? And you can argue either way. I'm not, but at some point, they've got to pull back and now they're pulling back on this stuff. So this means that the taxpayers will likely receive a significantly smaller refund compared to last year. So for 2022, the child tax credit is worth $2,000 for each qualifying child. A child must be under age 17 at the end of 2022 to be a qualifying child for the earned income tax credit eligible taxpayers with no children may get $560 for the 2022 tax year. So the earned income tax credit is based on both the level of income, but it actually goes up as your income goes up and it has a level of the children that are in there as well from zero to three children. So it's actually quite complex, meaning you don't get an added benefit after you clear, I believe three children with regards to more children. So it's actually quite complicated. Tax software is quite helpful to to figure it out. But if your numbers become a lot different than the prior year, you might think you did something wrong. But again, that's another one of the problems when we have these rapid changes to the tax code. The tax code should be something that's stable from year to year so that people can have it and I know what's happening. They don't get, they're not likely to get scammed that way. And they're they're likely to be able to plan better that way because the tax situation isn't going to change. So you can make long term plans into the future. So the more that we have to deviate from a standardized tax code, again, it causes a ripe environment for fraud and it causes an environment where you you're going to take the short term benefits because you don't trust the law and the long term to not change in a way that might be disadvantageous. So in any case, for the child independent care credit, taxpayers may receive up to 35% of their employment related expenses for 2022. Taxpayers that don't itemize and take the standard deduction cannot deduct their charitable contributions. So they put like a $300. It was quite small of charitable contributions on the first page of the 1040. And you know, again, that seemed like more of a gimmicky time of type of thing because that's a fairly small amount compared to what's on the itemized deductions. But usually the charitable contributions are on the itemized deductions. And that's another interesting topic because they tried to simplify the tax code a few years ago by increasing the standard deduction, which means less people are going to be itemizing, which usually helps lower the moderate income individuals because they're the people that are likely not to be itemizing. In other words, more wealthy individuals are the ones that are more likely to be itemizing. But a lot of the favorite credits that people, certain people like to, and I'm not saying they're bad credits, but certain interest groups you would think have an interest in those itemized deductions, such as obviously the home mortgage interest is helpful to homeowners you don't want to pull it out, but obviously it's going to be marketed by everybody in the real estate area as well that want to incentivize home purchases and whatnot. And then you've got the charitable contributions, which again it's nice to try to incentivize people putting into charity. But obviously the charities themselves have an interest in having a charitable deduction in those organizations and you would think, well the charities are just super nice people. They don't have any interest groups or anything like that. It's like okay, it's money. Money is flowing around. There's interest groups everywhere money is flowing. And so then what happens is you're going to think, well are some of these itemized deductions going to move over to other areas of the tax code as the law changes to deal with the fact that the itemized deductions have been reduced in significance in order to simplify the tax code. And we kind of saw that happen with the charitable contributions. They just stuck a line on page one of the 1040 for other charitable contributions, but it was only a temporary thing. So going forward it's kind of an interesting question in terms of we still have this increased standard deduction. They limited the state tax deduction. What are they going to do now? Are they going to in order to creep these deductions back in, right? That's usually what ends up happening. Are they going to try to lower the standard deduction again to make them more effective? Are they going to move some of those itemized deductions over to other areas of the tax code so they're not under the threshold of having to clear the standard deduction or maybe they'll just increase inflation massively so that the standard deduction threshold doesn't keep up with inflation, right? And then so then it would that would be another way they can kind of make that standard deduction less relevant and the itemized deduction is more relevant. So it's kind of interesting we'll see what happens going forward but in any case more information down below you got the credits and deductions for individuals there's a link to that here there'll be a link to this in the description.