2022 Retroactive or Expired Provisions
Credits reverting to prior tax law provisions after temporary changes
Child Tax Credit: 2K per child under 17 (no longer 3.6K under age 6 /3K under age 18).
Dependent Care Credit: up to 35% of 3K expenses (from 50% of 8K), up to two children under 13/disabled depdendents with lower income credit limitation in effect, ie most taxpayers get 20% of 3K, up to 2 children.
- Earned Income Credit: reverts from greater eligibility to the prior law with annual adjustments.
- 2-year allowance for nonitemizers to deduct cash charity has expired.
2023: Planning Ahead
Aside from the cost of living adjustments in the standard deductions, tax brackets, various retirement contributions, some specific tax planning items are:
- Required Minimum Distribution age will increase to 73 (and in 10 years increase to 75).
The penalty for missed RMDs drops from 50% to 25%, or 10% if corrected within a certain time period.
The $100,000 Qualified Charity RMD distributions will be indexed to inflation.
- Extended home energy credits for 2023-2032 tax years.
For whatever reason, Congress had named these into similar sounding categories.
"NonBusiness Energy Property Credit" had various individual limits and percentages, (particular the restrictions on exterior windows and doors at 10% cost and max $200 credit), $300 for heating pumps, $150 energy efficient furnaces, etc.) with a lifetime limit of $500. Taxpayers who claimed this anytime from 2006 to the present, likely maxed out their credit allowance.
It's now entitled "Energy Efficient Home Improvement Credit", increases to 30% expenses for energy-efficient purchases and includes home energy audits. Lifetime limits are eliminated and replaced by an annual $1200 maximum on expenses for credit calculations.
Advice is to try spreading out these qualified home improvements each year if possible.
Maximum expense allowed for credit calculation: (30% of these expenses)
Therefore, the maximum possible credit could be $3,200.
- $600 for exterior windows/skylights
- $250 per exterior doors ($500 max for all exterior doors)
- $150 energy audit
- $600 per item, central air units, gas/propane/oil furnaces and hot water boilers
- qualified gas/electric heat pumps, biomass stoves, separately subject to $2,000 annual limit
The other category also renamed, "Residential Energy Efficient Property Credit" is now "Residential Clean Energy Credit":
- Previously 26% of solar, wind, geothermal, fuel cell power to power/heat/cool home, increases to 30% and decreases in later years.
- Electric Vehicle Credit:
The 7.5K credit was extended for another 10 years by the Inflation Reduction Act passed in August 2022 with modified requirements. Final assembly must be in the United States, no longer based on number of cars sold. Credit also includes used cars at least two years old (30% cost of vehicle, up to 4K credit). Credit is income-limited and conditioned on the cost of vehicle, new and used.