Reviewing…Tax Rates and Other Information:
INDIVIDUAL TAX RATES are 10%, 12%, 22%, 24%, 32%, 35% and 37%.
Personal Exemptions have been eliminated.
(Keep in mind – names, social security numbers and birth dates of dependents will be needed for possible other credits available)
STANDARD DEDUCTION for 2021 according to your filing status:
- Married filing jointly – $25,100
- Head of Household – $18,800
- Single – $12,550
Note – those 65 and older receive an additional deduction
REMINDER, your deductions, listed below are a few things to consider:
Medical deductions are first reduced by 7.5% of adjusted gross income
The total of all state/local/real estate taxes are limited to $10,000
Miscellaneous itemized deductions subject to 2% adjusted gross income have been eliminated. These expenses include unreimbursed employee business expenses, investment expenses, tax preparation fees, advisory fees from brokerage accounts, safe deposit boxes, etc.
529 PLANS expands the definition of “qualified education expenses”:
Funds can be used for elementary and secondary public, private or religious schools
- $10,000 per student, per year allowed
- Funds can be used to pay student loans
- $10,000 per beneficiary, lifetime
Other Updates Include:
- Required Minimum Distribution age limit has increased to 72 years old
- Those who were 70 ½ prior to 2020 are subject to the previous RMD rules
- Contributions to IRA’s no longer are restricted by your age as long as you have earned income and qualify to make a contribution
2021 – Single Plan $3,600
2022 – Single Plan $3,650
2021 – Family Plan $7,200
2022 – Family Plan $7,300
Over 55, an additional contribution of $1,000 is allowed
Keep in mind, contributions to HSA’s for a 2021 deduction can be made up until the tax filing date, Monday, April 18, 2022.
- Annual exclusion for a gift is $15,000
- Alimony payments are no longer deductible by the payer or included in income of the recipient, for agreements executed after January 1, 2019.
- Social Security annual wage base for 2022 is $147,000