Tax season has begun, and millions of Americans collect their records to prepare for their tax refunds. The Internal Revenue Service (IRS) encourages taxpayers to file as soon as possible, preferably electronically. Due to laws and official orders, several tax changes will take effect on January 1, 2022. From declining balance depreciation to pension provisions and VAT, an overview of taxes is new for 2022. Below you’ll find new tax rules coming into force in 2022.
The basic allowance has been increased
In 2022, only taxable income above the basic allowance of $11,000/$22,000 (single/joint assessment) will be subject to income tax. However, it estimated the basic allocation for 2021 to be $10,600/$20,200.
Employees can earn up to 48 dollars per month of tax-exempt benefits, with higher benefits in kind so far. By 2022, the monthly tax exemption ceiling will increase to 55 dollars. However, if the benefits in kind are provided via vouchers or payment cards, the requirements of § 2 paragraph 1 no. 10 of the Payment Services must fulfill the Supervision Act (ZAG). If these criteria are not met, the controllers of social charges will withdraw the exemption in 2022. By January 1, 2022. (BMF letter of April 13, 2021).
Rich tax 2022
Income tax is usually levied at a rate of up to 42%. Only the top earners must reckon with a tax increase of 3%. Income in 2022 above USD 30,500/USD 610,000 (single/contributory) will be taxed 45%.
Corporate tax option
According to section 1a, anyone filing in 2021 will benefit from the new option model for the first time in 2022. Under the new rules, craft businesses operating in partnership can now be taxed like LLCs or joint-stock companies.
Lower interest rates
It must now reform the new federal government after the Federal Constitutional Court declared default interest by the tax authorities illegal during the interest calculation period from January 1, 2019. From the old rate of 6% per annum, it will approve a substantial reduction in interest rates at the end of July 2022.
Retirement Plan
From 2022, entrepreneurs can deduct 94% of their contributions to the Rürup pension scheme as a particular tax expense. However, when deducting extraordinary costs, you must observe several restrictions. In 2022, the deduction for single people must not exceed $26,500 (maximum contribution of $28,100, i.e., 94%), and the deduction for married couples contributing must not exceed $53,000(maximum contribution of $56,200, or 94%).
Travel Expenses Abroad
If your employees travel abroad, you can pay them a particular one-time, non-taxable cost of room and board. A letter from the Federal Treasury established its amount. Overseas travel food and overnight allowance in 2021 will continue in 2022. (BMF letter dated December 3, 2020).
Tax-free Corona bonus
By section 3 of the Income Tax Act, you can offer incentive bonuses of up to €1,500 per employee tax-free. Payments are due March 31, 2022. After that, starting today, these payments are no longer tax-exempt.
Company pension plan
Employees who pay part of their Christmas or vacation pay into a company pension plan in direct insurance, pension funds, or pension funds are tax-exempt in 2022 up to a maximum of 6,768 euros.
Flat Rate for Home Office
Home office flat rate of $5 per day, up to a maximum of $660 per year, is deductible as income tax savings for employees and operating expenses due to reduced benefits, only for 2020 and 2021. However, you could extend the tax exemption to many people working from home again.
Pension amount
For the first time in 2022, everyone who turns 64 in 2021 will receive so-called pension benefits. In 2022, the Treasury will reduce the income of the self-employed or non-self-employed by 14.5%, but only by a maximum of 684 euros.
Age relief amount
The so-called old-age benefit will be offered for the first time in 2022 to those who turn 64 in 2021. In 2022, the tax authority reduced self-employed or non-self-employed income by 14.5%, but only 750 dollars.
In the culinary industry, Value Added Tax (VAT) is charged
Bakers and butchers who sell products in their restaurants will not see a change in their reduced VAT rate for ready meals in 2022. Food will continue to be taxed at 7% until the end of 2022, whether consumed on-site or away from home.
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