As the American economy continues its rebound from the coronavirus pandemic, demand and a variety of other factors are causing inflation to near record highs. This rise continually impacts individuals across the country at every turn, from the gas pump to the grocery store, and everywhere in between. The increasing costs of goods and services without similarly styled pay raises can be difficult to navigate and the federal government is making adjustments to assist.

Inflation is pushing income tax brackets higher for 2022, indicating that any relief may not be quick to arrive. Fortunately, these changes could have a beneficial outcome but it’ll be another year in the making as the tax filing season for 2021 nears its inception. While no one can predict what the future may hold, it does at least appear that these adjustments could help when the time comes to file everyone’s 2022 taxes.

Inflation

At its core, inflation is an increase in the overall prices of all goods and services. Most individuals are somewhat familiar with the impacts of supply and demand on pricing, which does play a part in inflation, but overall its impact is simply a reduction in the perceived current value of available currency. 

Filing Status

There are four common filing statuses for taxes across the country - individual, married filing jointly, married filing separately, and head of household. Each of these will see an impact with the upcoming changes for 2022 submissions.

Standard Deduction

Already recently increased, the standard deduction is an amount subtracted from earnings before any tax is applied. This number varies depending on filing status and helps to reduce the amount of tax owed when submitting a return. In the past, many chose to itemize their taxes (indicating they could receive a better rate by applying all of their qualified items in lieu of this practice) but with the recent increase a majority of people now elect to take the standard deduction and more changes are on the way.
Changes

Beginning with the 2022 filing (coming in the spring of 2023) tax brackets have been adjusted to hopefully reduce the amount owed on any income for certain filers. Both the individual and married rates have been adjusted. In addition, the standard deduction is raising again to $12,950 for individuals and $25,900 for those who file under either married status option. Up $400 and $800 respectively from the current rates. An increase in 401(k) plans for 2022 and other tax adjustments are also expected to help ease the burden of the current inflation once the time finally arrives to file in another year.

If you’re ready to file a return now or need help determining exactly how these changes could impact your taxes, then let the professionals at Bloch Rothman and Associates assist you today. In addition to providing answers to all of your tax questions, they can also take care of multiple other issues dealing with paying or owing back taxes, required audits signaled by either the IRS or an outside agency, or any other personal or corporate wealth management issues. Along with providing a quality tax service, our group can also complete all types of returns or answer any other factors associated with financial issues or concerns you may have. Serving Denver and all of the surrounding areas for 35 years, our firm has an extensive history in helping clients with any and all of their tax issues or dealings with the Internal Revenue Service. If you have questions about your personal, business, estate, or any other filings, don’t hesitate to contact us today. Available for all of your tax needs, there are also a number of bookkeeping and payroll services offered to assist you and your business. We look forward to meeting you and providing the type of service you can rely on whatever your needs may be very soon!