If you’re wondering about the changes in the 2022 tax brackets, read on. The personal exemption remains at $0 for the year and is not capped, but the IRS has made changes to revenue, the AMT, and EITC updates. If you’re considering filing for taxes in 2023, you may want to take advantage of a record COLA increase. The new tax laws may even increase your tax brackets in 2023, as the top marginal tax rate could increase to 39.6% for individuals earning over $400 or $450,000 for couples.
Maximum credit allowed for adoptions
In the United States, the federal government has increased the adoption tax credit over the past few years. In 2022, qualifying adoptions are eligible for a maximum credit of $14,890 per child. The credit is not refundable and can only be used to offset a tax liability, not to erase it. The amount of credit you can claim each year depends on your income, but any unused portion can be carried over to the following year.
In addition to American citizens, foreign residents, and children with special needs may also qualify for this credit. These children may also qualify for the higher credit amount, depending on the circumstances. The child’s health and medical needs must also be taken into account. Tax credits for adoption can be claimed for qualifying expenses in the year the adoption is final. For more information on how much credit you can claim for adoptions in 2022, see the examples below.
Maximum credit allowed for education expenses
The American opportunity tax credit can lower your tax bill by up to $2,500 per year. The credit covers the first $2,000 of eligible educational expenses, including school fees, books, supplies, transportation, and more. The credit is available to undergraduate students and their parents for up to four years, and parents of students can claim the education tax credit for their child as well. Here are some ways you can take advantage of this tax credit.
A taxpayer may claim the maximum credit of $2,500 per student. The credit is calculated as a percentage of the first $2,000 in college costs for single filers or $118,000 for married couples filing jointly. The credit is allowed for tuition, textbooks, required course materials, and other qualifying expenses for up to four years. There is no cap on the amount of education expenses that can be claimed, and the credit may be spread over several years.
Maximum credit for long-term capital gains
For investors, long-term capital gains rates represent a real prize. These rates can dramatically lower your tax bill, and they’re now available in four different tax brackets: 0%, 15%, and 20%. What’s more, the IRS has increased the income thresholds for each bracket so you can make more before tipped into the next tax bracket. So, what do you have to do to qualify for the maximum credit for long-term capital gains in 2022?
For instance, in 2022, a married couple filing jointly will have $70,000 in other taxable income (after deductions) and $20,000 in long-term capital gains. The tax rate cutoff for both the long-term capital gains and qualified dividends is $83,350. Thus, they will pay only 15% on the remaining $6,650, because the credit for the latter is applied to future capital gains.