March 31, 2023
Reminders for 2022 tax returns
Although there were no major changes taking effect for individual taxpayers during the 2022 tax year, there are a few minor wrinkles to keep in mind.
Delayed deadline. Tax returns are due on April 18 this year, rather than April 15. The 15th falls on a Saturday, and the next business day, April 17, is the Emancipation Day holiday in Washington, D. C. Hence, the due date becomes Tuesday, April 18. Taxpayers who live in disaster areas may have until May 15 to file their returns. State-specific details may be found at the IRS website at https://www.irs.gov/newsroom/ tax-relief-in-disaster-situations.
Reduced child tax credit. In response to the pandemic, the child tax credit was temporarily increased to $3,600 for children five and under, $3,000 for those ages six through 17. The increase was not renewed for 2022, so the credit went back to $2,000 per qualifying child.
Charitable deductions. There is no longer a supple- mental charitable deduction permitted for those who use the standard deduction. The suspension of certain limits on the charitable deduction for itemizers was not renewed.
State payments. Some 21 states made payments to citizens in 2022 in connection with the pandemic. In a late-breaking announcement, on February 10, the IRS stated that most of these payments do not have to be included as income for 2022 tax returns. The determination was made in the interest of sound tax administration, and applies only to the 2022 tax year, as the pandemic emergency will end in May 2023, the IRS said.
In Georgia, Massachusetts, South Carolina, and Virginia the payments were refunds of state taxes paid. In those state, the payment is taxable if it generated a tax benefit. If there was no tax benefit, either because the taxpayer used the standard deduction or because the $10,000 cap on the deduction for state and local taxes applied, the payment is not taxable.
In Alaska, California, Colorado, Connecticut, Delaware, Florida, Hawaii, Idaho, Illinois, Indiana, Maine, New Jersey, New Mexico, New York, Oregon, Pennsylvania and Rhode Island the payments were for the promotion of the general welfare or for disaster relief. As such, they may be excluded from income for 2022.
Note that Illinois and New York had both types of payments. Taxpayers who received both payments will need to apply both rules. Note also that the exclusion from income does not apply to the Permanent Fund Dividend from the state that Alaskans receive.
Complete details may be found at https://www.irs.gov/newsroom/-issues-guidance-on-state-tax-pay-ments-to-help-taxpayers.
Taxpayers who included state payments in taxable income on returns filed before the February 10 IRS announcement may file an amended return for a refund. Consult your tax advisers to learn more.