Important Changes to Know before Filing 2021 Taxes

Tax season is here, and there are a few changes you need to be aware of before you file your 2021 taxes. 

First of all, this year we all get a few extra days to file our tax returns. 

Instead of the typical April 15, 2022, deadline, this year it’s April 18 due to the Emancipation Day holiday falling on April 15. If you live in Massachusetts and Maine, you have until April 19 due to Patriots Day.

Keep reading for other important changes before you file your 2021 taxes.

Higher Standard Deductions

2021 taxes

Standard deductions were adjusted for inflation and rose slightly for the 2021 tax year.

The standard deduction is now $12,550 for single filers and married filing separately, $25,100 for joint filers, and $18,800 for heads of household.

Income Brackets Changed, but Rates Stay the Same

2021 taxes

For the 2021 tax year, changes were made to the income brackets to adjust for inflation; however, the tax rates are the same.

2021 taxes

Credit: https://taxfoundation.org/2021-tax-brackets

Child Tax Credits

2021 taxes

If you received an advanced payment for the Child Tax Credit in 2021, these were the monthly payments of either $250/month for kids between 6 and 17 or $300/month for kids under age 6. 

Be on the lookout in your mail for Letter 6419. This is the form you will need in order to receive the other half of your payments, which will be added to your tax refund – if your income still qualifies.

Earned Income Tax Credits

2021 taxes

For the 2021 tax year, the earned income credit ranges from $1,502 to $6,728 –  depending on your filing status and how many children you have. 

You can use either your 2019 income or 2021 income to calculate your credit, and use whichever number gets you the bigger credit. 

The American Rescue Plan of 2021 “has a “lookback” provision that allows you to use your 2019 earned income instead of your 2021 earned income to calculate the Earned Income Credit (EIC) or Additional Child Tax Credit (ACTC) on your 2021 tax return if doing so makes the credit larger. This will help you get a larger credit amount if your income was reduced in 2021 due to unemployment or other reasons,” according to Turbotax.¹

Also, you don’t have to have a child to qualify for this credit. 

Note: By law, if you qualify for this credit, the IRS cannot send your refund until mid-February, no matter how early you file.

Stimulus Checks

2021 taxes

Did you receive stimulus checks from the Economic Impact Payments? If so, be on the lookout for Letter 6475 in the mail. 

This letter will help you determine if you are entitled to and should claim the Recovery Rebate Credit on your tax year 2021 tax return. 

Note that Letter 6475 only applies to the third round of Economic Impact Payments. These were advance payments of the 2021 Recovery Rebate Credit that would be claimed on your 2021 tax return. 

Most people have already received the payments. However, if you are missing stimulus payments, make sure to review the information to determine if you are eligible and need to claim a Recovery Rebate Credit for tax year 2020 or 2021.

Increased Deduction for Charitable Cash Contributions

2021 taxes

There is an increased deduction for cash charitable contributions this year. So, if you gave cash to charity in 2021, you can take the standard deduction and still deduct up to $300 for single filers and up to $600 for joint filers.

E-File Your Returns

2021 taxes

The IRS is spread thin, so expect delays this year – especially if you mail in your returns. 

Because of the backlog of paper returns, it may take 6 months or longer to get your refunds. If you don’t want to wait, make sure you e-file your tax return this year.

We regularly post videos with financial information and updates. Check us out on YouTube.

Watch Videos

Sources: 

  1. https://ttlc.intuit.com/community/earned-income-credit/help/how-do-i-use-the-lookback-provision-to-maximize-my-earned-income-credit-or-additional-child-tax/00/2134907
0 0 votes
Article Rating

401(k) Maneuver™ is offered by Royal Fund Management, LLC, which is registered as an investment adviser with the SEC and only transacts business in states where it is properly registered, or is excluded or exempted from registration requirements. SEC registration does not constitute an endorsement of the firm by the Commission nor does it indicate that the adviser has attained a particular level of skill or ability. Royal Fund Management, LLC, is not affiliated with or endorsed by NASDAQ.

All investment strategies have the potential for profit or loss. Changes in investment strategies, contributions or withdrawals, and economic conditions may materially alter the performance of your portfolio. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment or strategy will be suitable or profitable for a client's investment portfolio. There are no assurances that a client’s portfolio will match or outperform any particular benchmark. Asset allocation and diversification do not ensure or guarantee better performance and cannot eliminate the risk of investment losses. Projections are based on assumptions that may not come to pass.

Images and photographs are included for the sole purpose of visually enhancing the website. None of them are photographs of current or former clients. They should not be construed as an endorsement or testimonial from any of the persons in the photograph.

All third-party trademarks, including logos and icons, referenced in this website and our content, are the property of their respective owners. Unless otherwise indicated, the use of third-party trademarks herein does not imply or indicate any relationship, sponsorship, or endorsement between 401(k) Maneuver and the owners of those trademarks. Any reference inside this website or content to third-party trademarks is to identify the corresponding third-party goods and/or services.

0
Would love your thoughts, please comment.x
()
x

Select a Date from the Calendar below

UPDATE YOUR 401(k) ACCOUNT

Select a Date from the Calendar below

UPDATE YOUR 401(k) ACCOUNT

Have questions? Need help?

Book Your Complimentary

15-Minute 401(k) Strategy Session


logo

Looking for tips that might maximize your retirement
savings and help you be a better steward of your money?

Subscribe to our 401(k) Blog

The go-to-source for your retirement investing and saving tips

5 401(k) Accounts Mistakes that May Negatively Affect Retirement Income

Download Your Copy Today

*Your privacy is important to us. We do not rent, sell or share your information.


Why Account Balancing & Allocation May Affect 401(k) Performance

Download Your Copy Today


*Your privacy is important to us. We do not rent, sell or share your information.


The 5 Top Costly 401(k) Rollover Pitfalls

Download Your Copy Today

*Your privacy is important to us. We do not rent, sell or share your information.

Make the Best Decision for Retirement:
Understanding the Different Types of
Financial Advisor Licenses

Download Your Copy Today

*Your privacy is important to us. We do not rent, sell or share your information.


How Popular Advice On Target Date Funds May Be
Working To Undermine Your 401(k) Retirement Savings

Download Your Copy Today

*Your privacy is important to us. We do not rent, sell or share your information.


3 Things That May Supercharge Your Future
401K Performance...Even In a Down Economy

Download Your Copy Today

*Your privacy is important to us. We do not rent, sell or share your information.