2021 Tax Facts- What you need to know

by | Feb 3, 2021 | Medigap/Medicare supplement, Uncategorized


2020 was crazy. Let’s get on with our lives this year. I am sure we will hit a few hurdles. But we hit the bottom last year so I can’t imagine it getting it much.
2020 brought seismic changes to our lives
Congress has made significant changes changes this year, and if they are made retroactive to the beginning of the year,
Most are changes to the income or contribution limits, reflective of the effects of inflation with the tax code.

Please Note: We Are Not Tax Advisors. Please Consultant with You Accountant for Details

2021 Important Tax Facts for All Taxpayers
Seven Brackets remain, but here at the changes:
• 10%: Single taxpayers with incomes of $9,950 or less; married couples filing jointly with incomes of $19,900 or less.
• 12%: Single taxpayers with incomes between $9,951 and $40,525; married couples filing jointly with incomes between $19,901 and $81,050.
• 22%: Single taxpayers with incomes between $40,526 and $86,375; married couples filing jointly with incomes between $81,051 and $172,750.
• 24%: Single taxpayers with incomes between $86,376 and $164,925; married couples filing jointly with incomes between $172,751 and $329,850.
• 32%: Single taxpayers with incomes between $164,926 and $209,425; married couples filing jointly with incomes between $329,851 and $418,850.
• 35%: Single taxpayers with incomes between $209,426 and $523,600; married couples filing jointly with incomes between $418,851 and $628,300.
• 37%: Single taxpayers with incomes of $523,601 or more; married couples filing jointly with incomes of $628,301 or more.
The Silver Lining, Interest Rates hit Rock Bottom
(Not only did Interest Rates hit Rock Bottom.  I did too! Working out is hard takes it out me!)
The Standard Deduction are up, hopefully I can get up!
Standard deduction amounts are increasing slightly in 2021, to $12,550 for individuals and $25,100 for married couples filing jointly
AMIT-Exempt Amounts:
The exemption amounts for the alternative minimum tax are increasing slightly in 2021, to $73,600 for single filers and $114,600 for married couples filing jointly. The exemption amounts phase out for single filers with alternative minimum taxable incomes of less than $523,600, and $1,047,200 for married couples filing jointly.
Important Rates To Remember:

The most important related to most recipients of this newsletter:

Dec. 31:
• Retirees age 72 and older must take required minimum distributions from traditional IRAs and 401(k)s; those RMDs are based on their balances at the end of 2020.
• Last date to make contributions to company retirement plans (401(k), 403(b), 457) for 2021 tax year. 

Important Facts for Investors

Qualified Dividend and Long-Term Capital Gains Rates: Three rates are still in place for dividends and long-term capital gains–0%, 15%, and 20%–but they don’t map perfectly by tax bracket as they did in the past. Here are the parameters for each of the rates.

• 0%: Single taxpayers with incomes between $0 and $40,400; married couples filing jointly with incomes between $0 and $80,800

• 15%: Single taxpayers with incomes between $40,401 and $445,850; married couples filing jointly with incomes between $80,801 and $501,600.

• 20%: Single taxpayers with incomes over $445,850; married couples filing jointly with incomes over $501,600.

Medicare Surtax: As in years past, an additional 3.8% Medicare surtax will apply to the lesser of net investment income or the excess of modified adjusted gross income over $200,000 for single taxpayers and $250,000 for married couples filing jointly.

IRA Contribution Limits (Roth or traditional): $6,000 under age 50/$7,000 over age 50.

Call Us Today if you want to look into tax-deferral opportunities

Beau Singletary, ChFC, CLU

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