Tax Law Changes
What provisions have expired?
- Child tax credit (CTC) expansion
- Recovery Rebate Credit
- Increased amount of the child and dependent care credit (CDCC) and eligible expenses, modified phase-out of the credit for higher earners, and refundability.
- Earned income tax credit (EITC) expired provisions:
- Higher income limits and credit for taxpayers with no qualifying children
- Ability to figure credit based on 2019 income
- Elimination of upper age limit; Minimum age of 19; Minimum age of 18 for qualified homeless youth and qualified former foster youth;
- Private mortgage insurance premiums (PMI) deducted as home mortgage interest (through 2021)
- Temporary deduction for charitable contributions for taxpayers who do not itemize (through 2021)
- A taxpayer who received, or was approved to receive, unemployment for any week in 2021 was considered to be an applicable taxpayer and to have household income at 133 percent of the FPL if his or her household income was at or above 133 percent of the FPL (through 2021).
- The provision for qualified sick and family leave credits expired on 09/30/21.
What temporary provisions are still in effect?
- The nonbusiness energy property credit is extended for 2022 and the name has been changed to energy efficient home improvement credit.
- Exclusion from gross income is available for student loan forgiveness after 2020 and before 2026 for most forgiven student loans. See Publication 970 for details.
- The temporary 100% deduction for food or beverages from restaurants. Beginning January 1, 2021, through December 31, 2022.
- An employer may contribute up to $5,250 annually toward an employee’s student loans, and such payment is excluded from the employee’s income through 2025. The $5,250 cap applies to both the student loan repayment benefit as well as other educational assistance (e.g., tuition, fees, books) provided by the employer.
- Exclusion from gross income of canceled qualified principal residence indebtedness (through 2025).
- For most years, only taxpayers and families whose household income for the year is between 100 percent and 400 percent of the FPL for their family size may be eligible for the PTC. Through 2025, however, taxpayers with household income of 100 percent or more of the FPL may be eligible for a PTC. See the Premium Tax Credit lesson and Instructions for Form 8962, Premium Tax Credit, for details.
What changes from last year are permanent?
- Earned Income Credit changes:
- Individuals and couples who have Social Security numbers can claim the credit, even if their children don’t have SSNs. In this instance, they would get the smaller credit available to taxpayers without qualifying children. In the past, these filers didn’t qualify for the credit.
- More taxpayers who also have investment income can get the credit. Starting in 2021, the limit on investment income is increased to $10,000. After 2021, the $10,000 limit is indexed for inflation. See EIC updates in this lesson for 2022 amount.
- Special rule for separated spouses. Taxpayers can claim the EIC if they are married, not filing a joint return, had a qualifying child who lived with them for more than half of the tax year and either:
- lived apart from their spouse for the last 6 months of the year or
- are legally separated according to state law under a written separation agreement or a decree of separate maintenance and didn’t live in the same household as their spouse at the end of the year.