New IRS Tax Guidelines for 2021: What You Need to Know
The IRS has released new tax guidelines for the year 2021, which will be important for every taxpayer to know. These changes will affect your tax return, and it is important to be aware of them so that there are no last-minute surprises when filing your taxes.
Standard Deduction
The standard deduction for 2021 has seen slight changes. The standard deduction for a single taxpayer or married filing separately is now $12,550, which is an increase of $150 from 2020. For married filers filing jointly, it is $25,100, which represents a $300 increase from the previous year.
Tax Rates
The tax rates for 2021 have not changed from the previous year. The seven marginal tax brackets remain unchanged at 10%, 12%, 22%, 24%, 32%, 35%, and 37%. However, the income limits for each bracket have been adjusted for inflation.
Child Tax Credit
The Child Tax Credit has been expanded in 2021. It is now $3,600 for children under six years of age and $3,000 for children between six and 17 years of age. The income limit for full credit eligibility has also increased to $75,000 for single filers and $150,000 for joint filers.
Earned Income Tax Credit (EITC)
The EITC is a tax credit for low-to-moderate-income working individuals and couples, particularly those with children. The maximum credit for 2021 for a single qualifying child is $3,618, while for two or more children, it is $5,980.
2021 Retirement Plan Limits
The 401(k) contribution limit remains the same at $19,500 for those under 50 years of age. Those aged 50 and above can make a catch-up contribution of $6,500. The contribution limit for Traditional and Roth IRAs has also remained the same at $6,000 for those under 50 years of age, and $7,000 for those aged 50 and above.
Conclusion
It is essential to keep yourself updated with the latest tax guidelines, as it will help you in filing your taxes without any hassle or stress. These new guidelines will surely help you make more informed decisions when it comes to your taxes. The IRS has provided detailed information on their website, and consulting with a professional tax advisor is also recommended for any personal tax-related queries.
(Note: Do you have knowledge or insights to share? Unlock new opportunities and expand your reach by joining our authors team. Click Registration to join us and share your expertise with our readers.)
Speech tips:
Please note that any statements involving politics will not be approved.