Some Changes That May Affect Next Year’s Tax Return

You might not have filed this year’s return yet, but you should keep in mind that Congress changed the rules on things like charitable contributions and tax breaks for educational expenses for 2022.

By Ann Carrns

This past year may have been one of the most complicated tax seasons ever, but there are also recent updates that may affect your taxes when you file your return next year.

A flurry of changes made by Congress in its budget and pandemic relief bill in December extended some temporary tax provisions for a year or more, and made other temporary rules permanent. These sorts of changes are often called “tax extenders” and can be challenging to keep track of, so you may have missed them in all the talk about stimulus payments and Covid-19 vaccine rollouts.

The American Rescue Plan, the pandemic relief measure signed on Thursday by President Biden, includes significant tax changes affecting, in some cases, 2020 as well as 2021 tax returns. Read more about that here.

Here are a few of the earlier updates to keep in mind as you think about taxes you’ll pay when you file your tax return in 2022.

Charitable contributions. The December legislation continued, just for 2021, a $300 charitable deduction for filers who don’t itemize deductions on their tax returns. The measure also increased the maximum amount that married couples can deduct to $600. (The limit for 2020 was $300 per return, not per person.)

Typically, you can deduct charitable donations only if you itemize your personal deductions, rather than taking the standard deduction. But because of changes to the federal tax code made in 2017 through the Tax Cuts and Jobs Act, most taxpayers take the standard deduction.

Source: Read Full Article