by Kristin P. Sinclair, A Accu Tax June 26, 2022
In 2022 the standard deduction increased for most taxpayers. This is welcome news because inflation has certainly impacted the daily lives of most Americans. In 2022 the standard deduction for a married couple filing jointly will be $25,900.00. The standard deduction for a single person will be $12,950.00. The standard deduction for a head of household taxpayer will be $19,400.00. Please note that once a taxpayer reaches age 65, then will be $1,700 for a single person, $2,700 for a couple filing jointly, and additional deduction benefits for the blind.
Let’s think about a young hard working couple with employer income, group health insurance premiums paid with pre-tax dollars. Both also: contribute to a 401(k) at work, an HSA funded with pre-tax dollars, $50,000 term life insurance policy, a dental/vision/hearing policy, and a long-term disability policy.
This couple combined earns $120,000 per year prior to any pretax deductions. Their combined W-2 statements report federally taxable income at $80,000. Their 2022 standard deduction as a couple Married Filing Jointly should be $25,900. This couple will have net federal taxable income of $54,100. Much of their income will fall into the 12% tax bracket, while a portion of their income falls into the 10% tax bracket. By using the employer pre-tax benefits from work they were able to reduce current federal taxable income. These tax savings enable the couple to set aside for funds in their 401(k) acounts for their retirement days.
They of course are contributing to Social Security Trust Fund taxes and Medicare Medicaid funds taxes. They also know that once they begin to receive Social Security and Medicare, they have already done a lot to make their retirement years more comfortable. They talked with their tax advisor Kristin to find out what they could do to most benefit from plans offered to them and build their future together. Maybe you should phone Kristin today at (803)329-0615 and talk about tax saving strategies !
Kristin P. Sinclair
Rock Hill SC and Charlotte NC
June 26, 2022
KPS: More information is available at IRS.gov.
See Publication 590-A and Publication 590-B.