Some new tax changes to 2021:
Standard Deduction Increased:
- Single and Married Filed Separately: $12,550
- Married Filed Jointly and Qualified Widow(er): $25,100
- Head of Household: $18,800
- Age 65 or older and/or blind
- MFJ, QW or MFS: $1,350
- Single or HOH: $1,700
*Although the Federal Standard Deduction is a high deduction, and you can’t itemize on your Federal Tax Return, if you have a State Income Tax, there are still several states that have a lower standard deduction, and you could still itemize on your State Tax Return. *
Business Mileage Rate for 2021 – 0.56 cents a mile
Increase of Child Tax Credit, see last week’s blog Child Credit
Changes to the Child/Dependent Care Credit
- For 2021 this credit will be a refundable tax credit
- The credit is a maximum of $8,000 for the care of one qualifying individual and $16,000 for the care of two or more qualifying individuals.
- The maximum credit rate is increase from 35 percent to 50 percent.
*Just a reminder: Business Use of Home is still NOT deductible for W-2 employees, as many are still working from home, there is no news from Congress that they are going to change this deduction. *
If you own your own business: For tax years 2021 & 2022 you may deduct 100% of meals “provided at a restaurant.” Entertainment expenses are still not deductible.
*As of November 2021, Tax Day will be April 15, 2022, which is a Friday so mark it on your calendar! *
We have not been informed when they will start accepting Tax Returns, we normally find out in December, stay tune.
These are just some of the changes for 2021, as each person will have different situations, please make sure to check with your Tax Professional for anything that you need to be looking out for.