The tax-filing season for 2021 income has begun. However, don’t forget to prepare forward and think about your tax status in 2022. At the start of each year, key figures in tax-law provisions are updated for inflation. Employees, their wages, and their plans all benefit from some of these changes.
So let’s cut through the nonsense and get to the crux of the issue. The main three sets of tax data for 2022 that all employees should be aware of are shown below. According to Forbes, they have to do with your salary: withholding, the possibility of having to pay anticipated taxes, and your retirement savings.
- Social security wage base – The Social Security tax (6.2 percent) is levied on salaries up to a yearly limit determined by the Social Security Administration.
- Income-tax bracket and withholding – This figure indicates whether the taxes withheld based on your amended Form W-4 information will cover the entire tax you will owe in 2022. Make sure you know your effective or average tax rate to prevent unconsciously “penalizing” more money.
- Contribution limit for qualified retirement plans – You can defer up to $20,500 from your paychecks into qualifying retirement plans, such as your 401(k), starting in 2022. The yearly cap was raised from $19,500, which had been the case for several years.
Tax filing deadline
The Internal Revenue Service is warning that a rise of COVID-19 infections, along with less budget authorization from Congress than the Biden administration had asked, might make this filing season especially difficult.
To avoid processing delays, he added, avoiding a paper tax return would be more critical than ever this year. For most Americans, the deadline to submit their 2021 income tax returns is Monday, April 18, three days later than the regular April 15 date.
The later date is due to the District of Columbia’s Emancipation holiday. Washington, D.C. holidays, like federal holidays, have an impact on tax deadlines for everyone. Because of a holiday recognized in those states, Patriots’ Day, taxpayers in Maine and Massachusetts have until April 19 to file their taxes.
For victims of the late 2021 Colorado wildfires, as well as victims of the December disasters in sections of Illinois, Kentucky, and Tennessee, the IRS has extended the deadline until May 16. The deadlines for various individual and business tax returns and payments have been extended, according to USA Today.
Read More: Tax Filing Season Starts Early This Year, Can Get Frustrating
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