The IRS Is Full Of Surprises
Surprising Tax Refunds
Are you one of the 430,000 taxpayers who got a surprise tax refund from the IRS recently? It doesn’t happen often, but the pandemic has caused many unusual occurrences in the past twenty months. One of the most exciting things to happen for some taxpayers is that their bank balances went up after the IRS automatically deposited more than $510 million into 430,000 taxpayer accounts for which they had deposit information on file. This is the outcome of a correction due based on not having to pay taxes on unemployment income last year. That ruling was made after President Biden came into office and after many people had already filed their tax returns. So, surprise, surprise! The IRS says there are still more taxpayers who will be getting a refund before the end of the year.
Surprising Inflation Adjustments
Well, maybe this is not so surprising since inflation has reached the highest level in 13 years. Nevertheless, the Internal Revenue Service recently released its annual inflation adjustments which include the standard deduction amount for individual and married taxpayers.
The standard deduction for married couples filing jointly for tax year 2022 is increasing to $25,900, up $800 from the previous year. For single taxpayers and married individuals filing separately, the standard deduction is rising to $12,950 for 2022, up $400, and for heads of households, the standard deduction will be $19,400 for tax year 2022, up $600.
For 2022, the tax rates are as follows:
37% for individual single taxpayers with incomes greater than $539,900 ($647,850 for married couples filing jointly).
35%, for incomes over $215,950 ($431,900 for married couples filing jointly);
32% for incomes over $170,050 ($340,100 for married couples filing jointly);
24% for incomes over $89,075 ($178,150 for married couples filing jointly);
22% for incomes over $41,775 ($83,550 for married couples filing jointly); and
12% for incomes over $10,275 ($20,550 for married couples filing jointly).
The lowest rate is 10% for incomes of single individuals with incomes of $10,275 or less ($20,550 for married couples filing jointly).
Surprising Increase To 401k Contribution Levels
The Internal Revenue Service said Thursday that the amount that individuals can contribute to their 401(k) plans is increasing to $20,500 in 2022, up from $19,500 for 2021 and 2020, as part of its annual inflation adjustments.
There are many more details about the annual adjustments the IRS released which you can check out here: Revenue Procedure 2021-45
A Total Of 2.8 Million Taxpayers To Get Unemployment Refund
The surprising refund to 430,000 taxpayers was great news to them but there is more to come. There are a total of 2.8 million taxpayers who will be getting an unemployment refund. So the holidays may be even more cheerful this year. And if you are one of the taxpayers who receive a surprise refund from the IRS, the upcoming holidays should certainly be more cheerful than they were last year.