IRS Announces 2022 COLAs for Transportation Fringes, FSA Deferrals Part 1

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CHARLOTTE – The IRS released cost-of-living-adjustments (COLAs) for 2022 reflecting any increases in the flexible spending arrangements (FSA) deferral limit, foreign earned income exclusion, and excludable transportation fringes, among other changes

Qualified transportation fringes: The amounts that may be excluded from gross income for employer-provided qualified transportation fringe benefits (transportation in a commuter highway vehicle and any transit pass) and qualified parking for 2022 increase to $280 ($270 in 2021).

Health FSAs: For plan years beginning in 2022, the dollar limitation under IRC §125(i) on voluntary employee salary reductions for contributions to health FSAs increases to $2,850 ($2,750 in 2021). For cafeteria plans that permit the carryover of unused amounts, the maximum carryover amount increases to $570 ($550 in 2021).

Standard deduction: The standard deduction amounts for 2022 increase to $25,900 for married couples filing jointly or surviving spouses ($25,100 in 2021), $12,950 for single taxpayers and married taxpayers filing separately ($12,550 in 2021), and $19,400 for heads of household ($18,800 in 2021).

Federal tax levies: The Tax Cuts and Jobs Act altered the way the amount of wages, salary, or other income exempt from a federal tax levy is calculated. For taxable years beginning in 2022, the dollar amount used to calculate the amount determined under IRC §6334(d)(4)(B) increases to $4,400 ($4,300 in 2021).

Foreign earned income exclusion: For 2022, the maximum foreign earned income exclusion amount under IRC §911(b)(2)(D)(i) is $112,000 (up from $108,700 in 2021). The maximum amount of the foreign housing cost exclusion is $15,680 (up from $15,218 in 2021).

Jen Stevenson Payroll LLC is a proud member of Union County Chamber of Commerce, Waxhaw Business Association, and the American Payroll Association

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