SECURITY REMINDERS FOR TAXPAYERS
Again, we are warning taxpayers to learn to recognize and avoid phishing emails, threatening phone calls and texts from thieves posing as legitimate organizations such as your bank, credit card company and government organizations, including the IRS. Do not click on links or download attachments from unknown or suspicious emails. Also, hang up the phone if someone is claiming to be the IRS. The IRS does not call taxpayers.
REMINDER - Some refunds will be held until Mid - February
Taxpayers who claim the Earned Income Tax Credit or the Additional Child Tax Credit may experience a refund hold. According to the Protecting Americans from Tax Hikes (Path) Act, the IRS cannot issue these refunds before mid-February.
EDUCATIONAL TAX CREDITS
College credits - Please remember to bring your 1098-T statement with you along with any receipts for books, course materials and required equipment for this year’s tax filing, it will save you time and money. The 1098-T can also be found online in your student’s college account.
NEW Ohio Education Credits – Three new credits are available in 2021. Certain taxpayers who paid for (1) home school expenses, (2) donated to a scholarship fund, or (3) paid tuition to a nonchartered, nonpublic school may be eligible for these credits.
2021 TAX BRACKETS
- 10% for incomes of $9,950 or less (less than $19,900 for joint filers)
- 12% for incomes over $9,950 ($19,900 for joint filers)
- 22% for incomes over $40,525 ($81,050 for joint filers)
- 24% for incomes over $86,375 ($172,750 for joint filers)
- 32% for incomes over $164,925 ($329,850for joint filers)
- 35% for incomes over $209,425($418,850 for joint filers)
- 37% for incomes over $523,600 for single filers ($628,300for married couples filing jointly)
Unemployment is fully taxable at the federal and state levels in 2021
CAPITAL GAINS RATES
0% for incomes up to $40,000 ($80,000 for joint filers)
15% for incomes over $40,000 ($80,000 for joint filers)
20% for incomes over $441,451 ($496,601 for joint filers)
REQUIRED MINIMUM DISTRIBUTIONS
RMD’s do not need taken until age 72 per the 2019 SECURE Act, but they must be taken in 2021.
RETIREMENT CONTRIBUTION LIMITS
401k - $19,500 (Extra $6,500 age 50+)
IRA - $6,000 (Extra $1,000 age 50+)
HSA - $3,600 single, $7,200 family
CHILD TAX CREDIT
The child tax credit increased to $3,000 for children 17 and under and $3,600 for children 5 and under. NOTE: Most families will have received up to 50% (per child) of the credit in advance starting in July 2021. As a result, only half of the credit would remain on your tax return.
MEDICAL EXPENSE THRESHOLD
For the 2021 tax year, the medical expense threshold will be 7.5% of AGI.
Here’s an example. Allie’s adjusted gross income is $100,000, she needs to be able to deduct more than $7,500 in medical expenses in order to be eligible for the deduction. Only expenses greater than $7,500 will count toward the deduction.
STANDARD DEDUCTION INCREASES
The 2021 standard deduction increases to the following:
- Single – $12,550
- Married filing jointly or Qualifying widow(er) – $25,100
- Head of household – $18,800
Remember, for taxpayers over 65, they receive an additional $1,350 per person for their standard deduction. .
- 56 cents per mile for business miles
- 16 cents per mile for medical miles
- 14 cents per mile for charitable miles