Everything You Need to Know About Taxes in 2021: A Comprehensive Guide
As we embark on a new year, it’s important to start thinking about taxes. Whether you’re a business owner or an individual taxpayer, the tax landscape is constantly changing. In this comprehensive guide, we’ll cover everything you need to know about taxes in 2021.
Changes to the Tax Code
One of the most significant changes to the tax code for 2021 is an increase in the standard deduction. For single taxpayers, the standard deduction will be $12,550, up from $12,400 in 2020. For married couples filing jointly, the standard deduction will be $25,100, up from $24,800 in 2020.
In addition to the increase in the standard deduction, there are several other changes to the tax code that taxpayers should be aware of. The Child Tax Credit has been expanded, with up to $3,600 for each child under six and up to $3,000 for each child between the ages of six and 17. The Earned Income Tax Credit has also been expanded, with the maximum credit increasing to $6,728 for taxpayers with three or more children.
Filing Deadlines
The filing deadline for individual taxpayers is April 15, 2021. However, taxpayers who need more time to file can request an extension until October 15, 2021. It’s important to note that an extension to file does not mean an extension to pay any taxes owed. Taxpayers who owe taxes should make a payment by the original filing deadline to avoid penalties and interest.
Businesses have different filing deadlines depending on their entity type. For example, S corporations and partnerships must file their tax returns by March 15, 2021. C corporations must file by April 15, 2021. It’s important to consult with a tax professional to ensure that you meet all applicable filing deadlines.
Recordkeeping
It’s important to maintain accurate records throughout the year to prepare for tax filing. This includes records of income, expenses, and deductions. Business owners should also keep track of employment taxes, such as Social Security and Medicare taxes.
Keeping records is particularly important for taxpayers who plan to claim deductions. For example, taxpayers who claim a home office deduction must maintain records of the business use of their home.
Avoiding Tax Scams
Unfortunately, tax scams are a common occurrence, particularly during the filing season. Taxpayers should be aware of scams that involve phone calls, emails, or text messages that claim to be from the IRS. These scammers often ask for personal information, such as Social Security numbers or bank account numbers.
The IRS will never contact taxpayers by phone, email, or text message to request personal information. If you receive a phone call or email from someone claiming to be from the IRS, it’s important to hang up or delete the email and report the scam to the IRS.
Conclusion
In conclusion, taxes can be a complex topic, but it’s important to stay informed to ensure that you’re meeting all applicable tax requirements. Some key takeaways from this guide include staying up to date on changes to the tax code, meeting all applicable filing deadlines, maintaining accurate records, and being aware of tax scams. By following these guidelines, taxpayers can avoid penalties and ensure that they’re filing accurate tax returns.
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