Individual Tax Services

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What Do the 2021 Cost-of-Living Adjustment Numbers Mean For You?

The IRS has announced its 2021 cost-of-living adjustments to tax amounts that might affect you. Many increased to account for inflation, but some remained at 2020 levels. These adjustments include:

  • Individual Income Taxes
  • Alternative Minimum Tax (AMT)
  • Education and Child-Related Breaks
  • Gift and Estate Taxes
  • Retirement Plans

More Details on the 2021 Cost-Of-Living Adjustments

How Federal Taxes Will be Affected With a Biden Presidency

Biden's tax policy includes numerous changes that could impact individual taxpayers' tax bills, particularly those with higher incomes.

Read more on the proposal for personal taxes.

What are the Latest Tax Updates From Washington?

  • [May 2021] President Biden recently announced his $1.8 trillion American Families Plan (AFP), the third step in his Build Back Better policy initiative. The announcement followed the previous releases of the proposed $2.3 trillion American Jobs Plan and the Made in America Tax Plan. These plans propose major investments in various domestic initiatives, such as expanded tax credits for families, offset with tax increases on high-income individual taxpayers and corporations. More information on proposed tax changes.
  • [March 2021] The American Rescue Plan Act (ARPA) was enacted on March 11, 2021. This newest legislation aimed at providing economic and other relief from COVID-19 includes $1.9 trillion in funding for individuals, businesses and state and local governments. ARPA extends and expands some of the critical provisions in the CARES Act and the Consolidated Appropriations Act (CAA). It also includes some new provisions that should come as welcome news to many families and businesses. Details on ARPA
  • [December 2020] The COVID-19 Relief Act was signed into law on 12/27/20 to provide additional economic relief for individuals and businesses. Many of the CARES Act’s tax credits, set to expire on 12/31/20, were extended in this newest bill. Details on COVID-19 Relief Act
  • [March 2020] The Coronavirus Aid, Relief, and Economic Security (CARES) Act was a $2 trillion bill with an array of significant tax-saving provisions for both individuals and businesses. The bill, signed into law on 3/27/20, includes provisions for 2020 to create needed cash flow and it could affect prior tax years. Details on CARES Act

 

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What are the 2021 Tax Rates and Deductions?

  • Individual Tax Rates: 2021 tax bracket thresholds were increased by approximately 1% over 2020 levels. Download the SVA tax guide: 2021 Tax Guide
  • Standard Deduction:
    • $25,100 (married filing jointly)
    • $18,800 (head of household)
    • $12,550 (single)
  • Child Tax Credit: The American Rescue Plan Act (ARPA) made several changes to the CTC for 2021. For example, it expanded the credit for eligible taxpayers from $2,000 to $3,000 per child ages six and above, and $3,600 per child under age six. It also made 17-year-olds eligible to be qualifying children for the first time and made the credit fully refundable. It also provides for monthly advance payments of the credit that will be paid from July through December 2021.
  • Alternative Minimum Tax (AMT): AMT exemption is $114,600 (married filing jointly) and $73,600 (single). The threshold for phase-out of the exemption starts at $1,047,200 (married filing jointly) and $523,600 (single).
  • Estate and Gift Tax Exemption: The lifetime exemption is $11.7 million. Estate and Trust Planning may be impacted by future legislation. Check out these articles to learn more. Critical Estate Changes Could be On the Horizon and Trust & Estate Planning 2021 With an Eye to Biden's Administration
  • Pass-Through Income Deduction: Up to 20% of qualified business income is subject to various limitations. The deduction is not available for professional service businesses (including accounting, health, law, consulting, athletics, financial services, and brokerage services) except architecture and engineering.
  • Net Operating Loss (NOL) Carryback: With the passing of the CARES Act, businesses and individuals can now carryback NOLs from 2018, 2019, and 2020 to the prior five tax years. Note that any losses arising in 2021 must be carried forward to future years. To understand the modified rules, view our Biz Tip on NOLs and AMT.

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tax guide_Page_1Click the image above for the 2021-2022 Tax Planning eGuide

 

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Services Offered: How SVA Can Help

Business professionals need easy access to information to make timely decisions. SVA has what you need, when you need it. Choose a topic below or just contact us directly. Our expertise is ready anytime you need it.

Planning for current and future education expenses is especially important. Several tax incentives can help reduce the cost of paying for higher education. These incentives include the American Opportunity Tax Credit, Lifetime Learning Credit, Qualified Tuition Programs, Student Loan Interest Deduction, 529 Plans, and the Coverdell Education Savings Account. The incentives can be a credit deduction or exclusion and may be limited by income.

The more you pay in taxes, the less money you have to invest in your personal financial goals. The key to reducing your tax liability rests in proactive planning. We can identify and implement key planning opportunities to minimize your current tax liability. Reach out to our experienced tax professionals who can look at your overall tax situation and help you understand and reduce your tax impact.

We can help you with:

  • At Risk Rules and Passive Activity
  • Individual Audit Assistance
  • Divorce Tax Planning
  • Health Savings Accounts (HSAs) Planning
  • Payment Planning
  • Stock-Based Compensation Planning
  • Tax Planning for Retirement
  • Estate and Trust Tax Planning
  • Charitable Giving Strategies

Being delinquent in your tax payments can result in a vast array of problems and cause substantial amounts of undue stress. Our qualified professionals can work with you in dealing with the IRS and other taxing authorities on delinquent tax liability, tax penalty, and interest issues, as well as challenges in your ability to pay the amount due. Offer in Compromise (OIC), bankruptcy, and negotiated payment schedules are a few of the strategies we can utilize in helping you deal with delinquent and disputed tax issues.

Resources

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American Rescue Plan Act of 2021 Overview

Learn how the latest COVID-19 economic relief bill affects businesses and individuals with this downloadable PDF!

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SVA® Web Tax Guide

Visit SVA’s Web Tax Guide to access a wide array of resources that can help prepare you and your business for the upcoming tax season.

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