Did you know your taxes have changed?
Filing your taxes is different in 2021 due to coronavirus legislation and inflation adjustments.
8 Ways Your Taxes Differ When You File in 2021:
1. Higher Health Savings Account (HSA) Limits – Contribution limits for HSA-eligible workers with high-deductible health insurance policies increase by $50 to $3550 for self-coverage and by $100 to $7100 for family coverage.
2. Waived Required Minimum Distributions – The CARES Act waived required minimum distributions (RMDs) for 2020 tax returns. Some retirees will have lower taxable incomes, thus owe less in federal income taxes in 2021.
3. Charitable Deduction Changes – To encourage charitable donations during the Coronavirus pandemic, the IRS allows a deduction of up to $300 in cash contributions.
4. Adoption Credit Changes – The maximum allowable credit amount has increased to $14,300 for 2020 tax returns.
5. Higher Income Brackets – Tax brackets amounts are adjusted to account for inflation. The income brackets for single and married filing status are:
6. New Standard Deduction Amounts – For 2020 taxes due in 2021, the standard deduction amounts (based on tax filing status) are:
- Married filing jointly: $24,800 — up $400 from 2019
- Married filing separately: $12,400 — up $200 from 2019
- Head of household: $18,650 — up $300 from 2019
- Single: $12,400 — up $200 from 2019
7. Limited Workplace Retirement Accounts Increased Contribution Limits – The base contribution limit for 401(k) plans is now $19,500, an increase of $500 from 2019. The limit for catch-up contributions (anyone 50+), is increased by $500 to $6,500.
8. Higher Limits for the Saver’s Credit – For 2020, the Saver’s Credit has higher income limits. You’re eligible for the Saver’s Credit if your income is no more than:
- Married filing jointly: $65,000 — up $1,000 from 2019
- Head of household: $48,750 — up $750 from 2019
- All other tax-filing statuses: $32,500 — up $500 from 2019
Get Ready for Tax Time – Be Prepared in 2021
As you are preparing your 2020 tax return, here’s a quick snapshot of what you’ll need to know with some important dates for your diary too…
Need a Pro?
Hiring a tax pro could make a lot of sense depending on your situation. Check out these top reasons for hiring an expert this year.
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Need a Good Tax Expert?
Redhead Luxury Properties has experienced agents and brokers to look after your every need and when it comes to taxes, we know some of the best tax pros in Colorado.
Call or text on (303) 912-1478 to set up a safe, socially distanced in-person appointment anytime.
Despite 2020 being a year like no other in history, we all still have to pay our taxes! I hope I have helped in some small way. This month’s download will also answer a few common questions and offer some tips to help your tax filing be as smooth and painless as possible.
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