2022 Cost of Living Adjustments for Credits and Contributions

The IRS announced 2022 cost-of-living adjustments for the following:

Retirement Account Contributions

• 401(k) plans are increased to $20,500 (up from $19,500 in 2020/2021)
  • Catch up contributions are unchanged at $6,500 for those age 50 and older
• Annual contributions to an IRA remain unchanged at $6,000 (additional $1,000 for eligible catch-up contributions), but income limits are increased to:
  • Roth IRA income phase-outs for contributions are increased to:
    • Single and Head of Household: $129,000 to $144,000
    • Married Filing Jointly: $204,000 to $214,000
  • Traditional IRA income phase-outs (for the individual not covered by a workplace retirement plan) for contributions are increased to:
    • Single and Head of Household: $129,000 to $144,000
    • Married Filing Jointly: $204,000 to $214,000
  • Traditional IRA income phase-outs (for the individuals that are covered by a workplace retirement plan) for contributions are increased to:
    • Single and Head of Household: $68,000 to $78,000
    • Married Filing Jointly: $109,000 to $129,000
    • Maximum deductible SEP contribution: $61,000

Miscellaneous

• Gift Tax Exclusion – amount is increased to $16,000 per person in 2022
  • Consider super funding a §529 Plan – lump 5 years of contributions at once ($80,000)
• Estate – 2022 unified exclusion amount is $12.06 million.
• Health Savings Accounts Contribution Limits:
  • Family: $7,300
  • Self-only: $3,650
  • Catch-up: $1,000 for taxpayers over 55 years old
• Business Mileage Rate increased to 58.5 cents per mile for 2022

Tax Credits

• Solar Credits (REEP)
  • Property placed in service between 1/1/2021-12/31/2022 = 26%
  • Property placed in service between 1/1/2023-12/31/2023 = 22%
  • After 2023 = 0%
• Business Meals
  • For business meals in 2021 and 2022 at a full-service restaurant (either dine in or take out) the deduction is 100%
• Child Tax Credits
  • Credits revert to pre-2021 amounts of $2,000 per eligible child
• Child and Dependent Care Credit
  • Dependent Care Benefit maximum contribution for 2022: $5,000
• Qualified Plug in electric vehicle credit up to $7,500
  • Confirm the credit available per manufacturer here

Dana R. Borys, an Accountancy Corporation is a boutique tax consulting, compliance, and representation firm working with affluent individuals and owners/officers/founders of start-up/emerging growth companies. Building connections beyond the code.