The upcoming tax year promises to be a busy one for both taxpayers and the IRS. This projection is based on all the changes made because of the pandemic as well as a host of other new items. Given this, it may be a good idea to consult this year with a tax advisor Walnut Creek CA.
Recent Tax Changes
A number of changes have been put in place by the IRS for the tax year 2021. You’ll want to be aware of these as you perform your tax planning throughout the year and especially as the time to file draws closer. Some of these include:
- Standard Deduction. This has been increased to $12,550 for single filers, $25,100 for married taxpayers, and $18,800 for heads of households for the tax year 2021.
- Stimulus Checks. If you didn’t receive stimulus payments that you believe you qualified for, the IRS will allow you to claim them as a tax credit for 2021, providing you are indeed eligible.
- Donations to Charity. You are eligible to deduct $300 of qualifying donations, even if you don’t itemize.
- Earned Income Credit. For 2021, the earned income credit ranges from $1,502 to $6,728 for those who are eligible.
- IRAs. Income limits that affect the deductibility of Traditional IRAs have been changed for the 2021 tax year.
More Tinkering with the Tax Code Ahead?
The Biden Administration came into power with a pledge to raise taxes. Despite a sticky relationship with Congress, some of the tax changes have already been enacted There is undoubtedly more to come.
Some of the legislation that may still come into effect this year may be covered by big Congressional bills such as the American Families Plan and the American Jobs Plan, still under active debate by lawmakers. Given all the changes, it may be good to get professional tax help this year.