Expert talks new tax deduction rules
Business owners who want to claim state tax deductions only have until December 31
WILMINGTON, NC (WWAY) – With the new year less than two weeks away, tax season is quickly approaching, and this year new tax rules could impact your tax return.
WWAY sat down with Attorney and Certified Public Accountant J. Wesley Casteen for the details on changes for the 2022 tax year.
According to Casteen, standard deductions have gone up to about $13,000 for those filing single and about $26,000 for married couples.
Casteen said when it comes to standard deductions – those filling don’t have to justify the deduction or show receipts.
However, itemized deductions have to show proof of the deductions in case of an audit.
“If you itemize, you can potentially get more than the standard deduction but you have to justify, and show receipts, and show that you are entitled to the higher deduction,” he said.
One big change for those who take the standard deduction is when it comes to charitable donations. Previously, tax filers were able to include a charitable deduction of $600 on top of the standard deduction.
However, that is no longer the case. Casteen says only those who file itemized deductions can claim charitable donations.
“So again because of the increase of the standard deduction, few people get to benefit from those charitable donations,” he said.
When it comes to money transfer apps, like Venmo or Cash App, Casteen says it’s best to report that income if the amount exceeds a certain amount.
“It’s relatively new and the $600 dollars, $600 threshold is new for this year, the threshold was previously higher,” he said. “Most will get a 1099 form.”
While most will get the 1099 form, it’s best to go ahead and report the amount right away, rather than wait until asked.
“And you may have an explanation, it’s easier to provide on the income tax initially than to try to follow up through correspondence with the service,” Casteen said.
Casteen adds it’s always best to hire a tax expert to avoid any issues with your tax return.
It’s also a possibility to take a deduction for state taxes. Casteen explains how in the video below and stresses anyone who wants to file for a state tax deduction only has until December 31.