Columbia SC tax attorney Joseph Arndt is dedicated to helping taxpayers steer clear of IRS trouble. He’s been doing that for over 30 years. A large part of that effort is keeping abreast of the annual changes in the tax code, large and small. Let’s a take a very basic look at some of the most important 2021 tax changes.
Marginal Tax Rates: Here is a look at your Marginal Rates for 2021, as provided by the IRS:
For tax year 2021, the top tax rate remains 37% for individual single taxpayers with incomes greater than $523,600 ($628,300 for married couples filing jointly). The other rates are:
- 35%, for incomes over $209,425 ($418,850 for married couples filing jointly);
- 32% for incomes over $164,925 ($329,850 for married couples filing jointly);
- 24% for incomes over $86,375 ($172,750 for married couples filing jointly);
- 22% for incomes over $40,525 ($81,050 for married couples filing jointly);
- 12% for incomes over $9,950 ($19,900 for married couples filing jointly).
- The lowest rate is 10% for incomes of single individuals with incomes of $9,950 or less ($19,900 for married couples filing jointly).
Standard Deductions: The standard deduction is just easier than itemizing, and many folks take advantage of it. These have increased ever-so-slightly, up $150 for single and $300 for married filing jointly.
Itemized Deductions: The limit on Itemized deductions was removed back in 2017 with the passage of the Tax Cut and Jobs Act. That elimination is still the standard in 2021.
AMT Exemption: The Alternative Minimum Tax exemption gets an inflationary bump this year. Last year’s amount of $72,900 single / $113,400 joint rises to $73,600 / $114,600 for tax year 2021. This year’s phase-out also rises, to $523,600 / $1,047,200.
EITC: Got three or more qualifying kids? Check out the Earned Income Tax Credit. Your maximum EITC rises in 2021 from $6,660 to $6,728.
Transportation Fringe Benefits: Does your employer provide you with free parking or a bus pass? Just like last year, if the value of that benefit is under $270/month, it does not increase your taxable income.
FSA’s: Maximum salary reductions for healthcare Flexible Spending Accounts hold steady at $2750, though carryover of unused amounts has increased slightly.
MSA’s: Slight changes to your Medical Savings Account this year. Most of the limits on the wide range of your deductibles and out-of-pocket expenses have increased around $50, though family coverage limits have gone up $100.
Estate Taxes: a tiny bump (relatively speaking) from 2020, with exemptions rising from $11.58MM to $11.7MM.
Gift Tax Exclusion: Last year’s $15,000 remains the same.
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Of course, these are only the broad strokes of 2021 tax changes. This year, as every year, unless you have the most basic income and deductions, you can likely benefit from the services of a tax consultant to help you stay on the straight and narrow.
Avoiding tax trouble and, if necessary, navigating through it is the specialty and the mission of Columbia SC Tax Attorney Joseph Arndt. He provides aggressive, experienced representation before the IRS and state tax agencies for audits and collection matters. Contact Joseph Arndt today for a consultation.