It's 2022 and if you haven't started tax planning for the year then you're already behind the 8 ball. However it's never too late, get started TODAY....
Here are some tax updates for filing your 2021 tax return
INCOME TAX BRACKETS
For the 2021 tax year, there are seven federal tax brackets:
10%, 12%, 22%, 24%, 32%, 35% and 37%
Your filing status and taxable income (such as your wages) will determine what bracket you're in.
FILING STATUS STANDARD DEDUCTIONS
Standard Deduction 2021 2022
Single; Married Filing Separately $12,550 $12,950
Married Filing Jointly & Surviving Spouses $25,100 $25,900
Head of Household $18,800 $19,400
For dependents who only have unearned income is $1,100
If the dependent has both earned and unearned income, the standard deduction is the greater of $1,100 or their earned income plus $350, but not more than the basic standard deduction for their filing status.
ITEMIZED DEDUCTIONS
Medical expense deduction is limited permanently to 7.5% of AGI regardless of age.
ADOPTION CREDIT
Maximum nonrefundable credit increased to $14,440 and begins to phase out when MAGI exceeds $216,660
CHILD TAX CREDIT
For 2021 ONLY, the credit includes 17 year olds and is increased from $2,000 per eligible child to:
$3,600 for each child under age 6
$3,000 for each child age 6 to 17
Phase out is as follows:
$75,000 for single
$112,500 for Head of Household
$150,000 for MFJ and QW
CHILD AND DEPENDENT CARE CREDIT
For 2021, this credit is fully refundable and the dollar limit for eligible expenses increases from:
$3,000 to $8,000 for one eligible child
$6,000 to $16,000 for two or more eligible children
EARNED INCOME TAX CREDIT
CHILDREN MAXIMUM CREDIT MAXIMUM EARNINGS
Single Married
Childless $543 $15,980 $21,920
One Child $3,618 $42,158 $48,108
Two Children $5,980 $47,915 $53,865
Three or More Children $6,728 $51,464 $57,414
STANDARD MILEAGE RATES
$0.56 BUSINESS MILEAGE
$0.16 MEDICAL OR MOVING MILEAGE
$0.14 CHARITY
$0.26 DEPRECIATION COMPONENT
LUXURY AUTOMOBILE DEPRECIATION LIMITS (purchased after 9/27/17)
First year - 2021 $10,200
First year w/bonus $18,200
Second year $16,400
Third year $9,800
Succeeding years $5,860
IRS SECTION 179
Taxpayers may expense up to $1,050,000 of qualifying property acquired for use in a trade or business. The SUV limit is $26,200
SOCIAL SECURITY
Maximum wages subject to Social Security tax is $142,800
GIFT TAX EXCLUSION
The annual gift tax exclusion is $15,000 per person
The annual exclusion for a spouse who is not a citizen of the US is $159,000
CORPORATE TAX RATE
Federal corporate income tax rate is 21%
