Tax-Savvy_Flipbook_2022

Standard Deduction and Itemized Deductions Most tax filers take the standard deduction, which was nearly doubled by the Tax Cuts and Jobs Act and reaches $12,950 for single filers ($25,900 for married joint filers) in 2022. The tax law repealed the deduction for personal exemptions, raised the child tax credit (for qualifying children under age 17), and made other significant changes to the tax law; provisions affecting individuals are scheduled to expire after 2025. Taxpayers whose deductions exceed the standard deductionmay choose to itemize deductions. However, because of the higher standard deduction, it’s expected that fewer taxpayers will do so. If you do itemize, you may be able to deduct the following types of expenses from your adjusted gross income (within limits). Mortgage interest Property, state, and local taxes Student loan interest Medical expenses Charitable contributions* Some taxpayers may be eligible for education tax credits. The American Opportunity Tax Credit offers a maximum annual credit of $2,500 for each of a student’s first four years of post-secondary education. It can be used to pay qualified tuition and fees for a student who is enrolled at least half-time. The Lifetime Learning Credit is an annual nonrefundable credit worth up to $2,000 per year, per tax return. The credit is calculated as 20% of the first $10,000 of qualified tuition and fees. It applies to college undergraduate, graduate, and vocational education in an eligible educational institution. Income eligibility limits apply to both education credits. *For taxpayers who use the standard deduction, there was an above-the-line “universal charitable deduction” of up to $300 for 2020 cash donations to charity; this CARES Act provision was extended and enhanced (reaching up to $600 for joint filers) by the Consolidated Appropriations Act for 2021 cash gifts to charitable organizations.

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