If you are self-filing your 2021 taxes, you may want to double-check. Make sure you don’t miss out on any tax changes. While some deductions will be the same this year, there are other significant changes due to the COVID-19 stimulus plans over the past two years. Here are a few specific tax-related items for the 2021 tax filing season that may impact you
The American Rescue Plan increased the child tax credit to $3,000 for families with kids ages 17 and under for 2021, with an extra $600 for children under age 6. Millions of Americans have received advanced credits. Filers who earned more than expected may need to pay some of it back. To qualify for the full credit, single filers need a modified adjusted gross income of less than $75,000. While married couples filing together must earn under $150,000.
Taxpayers that made charitable donations may take advantage of a write-off for cash gifts in 2021, even if they don’t itemize deductions on their federal tax return. For 2021, single filers may claim cash donations up to $300, and married couples may get up to $600, according to the IRS, from a relief measure from 2020.
In March 2021, Congress increased subsidies to help make health insurance more affordable for Americans. Since premium subsidies are capped at 8.5% of household income, some filers may have to repay some of the benefits. For example, if their earnings exceed the thresholds for 2021.
With new RMD changes initiated from The SECURE Act, if you turned age 70 1/2 in 2019, you would’ve been required to take your first RMD by April 1, 2020. If you turned age 70 1/2 in 2020 or later, you should have taken your first RMD by April 1 of the year after you turned age 72. This rule generally applies to the original owner’s age of a traditional IRA, SIMPLE IRA, SEP-IRA, a 401(k), or 403(b). Roth IRAs do not have RMDs.
Work with your financial professional regarding your investments and deductions. They can help to determine how these tax changes may impact your tax situation for 2021. Even if filing yourself.
SWG2043868-0322e The sources used to prepare this material are believed to be true, accurate and reliable, but are not guaranteed. This information is provided as general information and is not intended to be specific financial or tax guidance. When you access a link you are leaving our website and assume total responsibility for your use of the website you are linking to. We make no representation as to the completeness or accuracy of information provided at this website. Nor is the company liable for any direct or indirect technical or system issues or any consequences arising out of your access to or your use of third-party technologies, websites, information and programs made available through this website.
In addition, JP Williams is the Founder of Pillar Wealth Group who lives and works near Columbus, Ohio. JP founded Pillar Wealth Group with over 17 years of experience and specializes in financial planning, retirement planning, investment management, risk management, college planning, and estate planning. Contact us today to get started with your financial wellness journey. Contact us today to schedule an introductory meeting!