2021 had several temporary tax changes that are now no longer available. Here are some highlights of a few rule changes that are in effect for 2022.
Child Tax Credit:
- There will be NO advance of child tax credit in 2022.
- The child tax credit for qualifying children drops back down to a maximum amount of $2,000 per child (down from $3,600 for children under 5 and $3,000 for ages 6-17)
- The top age of children to qualify drops back to 16 years old.
Child and Dependent Care Credit (“Day-Care Credit”)
- The credit is allowed for up to $3,000 of expenses for one child/dependent and $6,000 for more than one. (Down from $4,000 per child and $8,000 for multiple)
- The full credit percentage drops down to 35% of eligible expenses and phases-down to a minimum credit of 20%. (Down from a full credit of 50%)
Form 1099-K (Third Party Payment Networks Report)
- This form is used by credit card companies, or other third-party payment networks (PayPal, Venmo, Etc.) to report your gross collections from that network. Starting in 2022, the reporting requirements for these companies has changed and more people than ever will be receiving these forms.
You should expect to receive a 1099-K from any and all third-party network in which you or your business collected over $600 for goods and/or services during the year(regardless of the number of transactions).
You should NOT expect to receive one of these forms if you just use these networks exclusively for personal transactions.
Therefore, if you are receiving payment from customers through the various cash apps (Venmo, PayPal, Facebook Pay, etc.) and/or other third-party networks, it will be very important to ensure that you are denoting business transactions versus personal transactions.
If you have any questions as to how these rules changes apply to you, please feel free to reach out to our staff at 307-577-4040.