It’s that time of the year again – tax time! The IRS will begin processing 2020 returns on Feb. 12. Here are some tips and resources for filing your taxes in 2021.
Filing Changes in 2021
- Income Brackets: Income brackets rose slightly this year to account for inflation. Visit the IRS website for more details on the new tax brackets.
- Standard Deduction: For the 2020 tax year, the standard deduction is $12,400 for single filers and married filers filing separately, $24,800 for married filers filing jointly, and $18,650 for heads of household.
- Charitable Giving Deductions: The CARES Act has helped simplify charitable donation deductions. This year, you can deduct up to $300 in donations to qualifying charities — even if you don’t itemize. Search for eligible organizations on the IRS website.
- IRAs and Retirement Plans: The CARES Act waived required minimum distributions (RMDs) for IRAs and retirement plans for 2020. RMDs count as fully taxable income, so if you’re a retiree who didn’t take the distribution, it’s like you receive a tax break. Learn more.
- Student Loans: The CARES Act allowed employers to voluntarily pay up to $5,250 of a worker’s college loan during 2020, tax-free for both the employer and the employee. Learn more.
Will my stimulus checks be taxed?
No, stimulus checks will not count as taxable income. Instead, they will be treated like a refundable tax credit for 2020.
Can I deduct any work-from-home expenses?
Even though many more people worked from home during 2020 due to the pandemic, you cannot deduct home office expenses unless you’re self-employed. The Tax Cuts and Jobs Act suspended tax write-offs for home office deductions through 2025 for employees who are not self-employed.
Please don’t hesitate to reach out if you have any questions on your home financing goals for the year – I would be happy to have a conversation about how I can help.