2022 tax season with Collins Consulting

December 28, 2022 | Collins Consulting

As we approach the 2022 tax season, the Collins Consulting team has been very busy with continuing education and preparing for the new tax year. We’re excited to offer, and will require completion of a digital tax prep questionnaire. The questionnaire is easy to use and will be very beneficial for both you and your tax preparer to ensure we have current personal information and income and tax deduction documents to prepare your return to get you the best results. The completion of this questionnaire could take as little as 5 minutes for simple returns but could take up to 30 minutes if there are several personal or employment changes or if a business, rental or a farm return is required.

For security reasons, the questionnaire will not retain information if not completed – so no option to partially complete and return later to finish. If you do not have access to a computer or prefer assistance, a Collins Consulting team member will complete the questionnaire for you for an extra fee.

Due to the complexity of tax return preparation, we will not be preparing returns face to face like several years ago, but will gladly discuss your return via e-mail, phone or zoom.

All tax preparation will be done via drop offs, email, attached to the questionnaire or fax:

• There is a secure drop off box in the main entrance of our location inside of TS Bank in Treynor, Iowa. The drop box is located in the front vestibule near the ATM and available for drop offs 24/7
• You can also submit documents to customerservice@collinsconsultingservice.com
• Fax documents to (712) 314-6334
• Attach to the tax prep questionnaire

A Collins Consulting tax preparer will contact you via phone, email or Zoom (video conference) to review your return before its finalized. Once the return is finalized with you, we will send the tax documents via DocuSign for you to review, e-sign and return. If you do not have access to a computer or prefer a paper copy of your return, you may request a paper copy for an additional fee and we can discuss your delivery choice at the time of your return review. From the DocuSign email, you can download to save or print a copy of your tax return for your files.

Additionally, if you are dropping off documents, we are asking you to drop off copies and not the original documents. This will allow us to work on your return digitally, via email through secure e-signatures.

Please complete the REQUIRED tax prep questionnaire before submitting your documents if you are filing personal taxes.

Please complete the REQUIRED organizer and return to Collins with your tax documents if you are filing LLC/corporate taxes.

This will ensure our tax preparers have the most accurate information, and we will know what to discuss with you while reviewing your return. You may request a personalized organizer by emailing customerservice@collinsconsultingservice.com.

This year has brought a lot of changes and we would like to bring those to your attention along with changes scheduled for the future.

2022 tax changes

Tax deductions reduced or eliminated

• No stimulus or advanced child tax credit
• No $600 contribution deduction if not itemizing
• No Private Mortgage Insurance (PMI) deduction
• Child tax credit $2,000 – previously $3,000/$3,600
• Child tax credit for $2,000 under age 17 – previously under age 18
• Day Care limit - $3,000 for one child and $6,000 more than one child and maximum of 35% of amount paid for daycare - was $8,000 and $16,000 and 50%
• Day Care limit thru employers as pre-tax - $5,000 – previously $10,000
• Earned income credit – maximum age 65 – was no age limit for 2021 only
  • Minimum age limit 25 – was age 19 for 2021 only

Tax deduction improvements

• Inflation adjusted tax schedules and standard deduction (approximately 3%)
• Mileage Rate $.585 for Jan-June 2022 - $.625 for July – Dec 2022
• Business meals at restaurant 100% deductible – same as 2021
• Educator deduction - $300 – previously $250
• Gift Tax limit $16,000 – previously $15,000 – excess would require gift tax return
• Marketplace medical insurance maximum premium 8.5% of income
• Solar energy credit increased from 26% to 30% 

2023 tax changes

• Business mileage rate $.655 per mile
• Inflation adjusted tax schedules and standard deduction (approx. 7%)
• Inflation adjusted social security income increase of 8.7%
• Gift limit - $17,000 – previously $16,000 - excess would require gift tax return
• Business meals at restaurant 50% deductible – previously 100%
• Residential energy credit maximum $1200 per year per taxpayer – was $500 lifetime
• Credit generally increases from 10% to 30% of cost with a maximum
  • Example of maximum credit is $250 per exterior door or $600 for all exterior doors, $600 for windows, furnace or hot water heater (Since there are many details, do research before major purchases)
• Plug in electric vehicle – renamed Clean Vehicle Credit
• Clean vehicle credit maximum cost for new vehicle is $55,000 for auto or $80,000 for Van, SUV or truck – also taxpayer income limit of $150,000 for single or $300,000 for married (additional credit for commercial and used vehicles)
• Also includes North American assembly and battery criteria limitations
• Bonus depreciation 80% - previously 100% - no change to first year depreciation
• Iowa moves to tax reporting similar to federal – starting with federal taxable income – no deduction for federal income tax paid
• Iowa lower maximum rate to 6% from 8.53%
• Iowa – retirement distributions not taxable if taxpayer is over age 55.

Other Information

• Virtual or digital currency continues to be a capital asset that is required to be reported when sold. Other income earned in Digital activity could require reporting of self-employment income

2026 changes

• Medicare to start Prescription cost negotiation
• Tax Cuts and Jobs Act expires – tax rates increase to 2016 level
  • (ie 12% to 15%, 22% to 25%, etc)
• Estate Tax exemption of $11.2m reverts to 2016 level of $5.6m

Status of Internal Revenue Service tax processing

As of Oct 21, 2022, the IRS had about 3 million individual and 4 million business returns awaiting initial processing plus additional two million amended individual and business returns.  These are returns that generally require involvement by an IRS employee.  It also means individuals have been waiting nearly two-thirds of a year to receive their refunds.  (Information provided by National Taxpayer Advocate – Erin Collins)

We are looking forward to another busy tax season. If you have any questions, contact us online or give us a call at (712) 487-3853.