Plan Ahead to Help Ease the Burden of Tax Season

Most U.S. taxpayers “completely agree” (68%) or “mostly agree” (26%) that paying their fair share of taxes is a civic duty.1 However, no one wants to pay more than his or her fair share. To help avoid doing so, consider addressing some important priorities before you begin filling out your tax forms.

Here are some steps that might help reduce stress when preparing your return. Continue reading “Plan Ahead to Help Ease the Burden of Tax Season”

Retirement Plan Limits on the Rise in 2022

Retirement savers have some reasons to celebrate in 2022.

Many IRA and retirement plan limits are indexed for inflation each year. Although the amount you can contribute to IRAs remains the same in 2022, other key numbers will increase, including how much you can contribute to a work-based retirement plan and the phaseout thresholds for IRA deductibility and Roth contributions.  Continue reading “Retirement Plan Limits on the Rise in 2022”

Year-End 2021 Tax Tips

Here are some things to consider as you weigh potential tax moves before the end of the year.

Defer Income to Next Year

Consider opportunities to defer income to 2022, particularly if you think you may be in a lower tax bracket then. For example, you may be able to defer a year-end bonus or delay the collection of business debts, rents, and payments for services in order to postpone payment of tax on the income until next year.  Continue reading “Year-End 2021 Tax Tips”

Charitable Giving

Charitable giving can play an important role in many estate plans. Philanthropy cannot only give you great personal satisfaction, it can also give you a current income tax deduction, let you avoid capital gains tax, and reduce the amount of taxes your estate may owe when you die.

There are many ways to give to charity. You can make gifts during your lifetime or at your death. You can make gifts outright or use a trust. You can name a charity as a beneficiary in your will, or designate a charity as a beneficiary of your retirement plan or life insurance policy. Or, if your gift is substantial, you can establish a private foundation, community foundation, or donor-advised fund. Continue reading “Charitable Giving”

Key Numbers Projected for 2021

Key Numbers Projected for 2021

Even though the official numbers have not yet been published by the IRS, we wanted to send over the projected key tax figures for 2021. When the official numbers are released, we’ll share an update with an associated Email Alert.

Standard deduction
2020 Projected for 2021
Married filing jointly $24,800 $25,100
Head of household $18,650 $18,800
Single $12,400 $12,550
Married filing separately $12,400 $12,550
Standard deduction for dependent Greater of $1,100 or $350 + earned income Greater of $1,100 or $350 + earned income
Additional standard deduction for blind or aged (65 or older)
Single/Head of household $1,650 $1,700
All others $1,300 $1,350
Taxable income threshold for top 37% income tax bracket
2020 Projected for 2021
Married filing jointly $622,050 $628,300
Head of household $518,400 $523,600
Single $518,400 $523,600
Married filing separately $311,025 $314,150
Long-term capital gain 20% threshold (based on taxable income)
2020 Projected for 2021
Married filing jointly $496,600 $501,600
Head of household $469,050 $473,750
Single $441,450 $445,850
Married filing separately $248,300 $250,800
Alternative minimum tax (AMT)
2020 Projected for 2021
Maximum AMT exemption amount
Married filing jointly $113,400 $114,600
Single/Head of household $72,900 $73,600
Married filing separately $56,700 $57,300
Exemption phaseout threshold
Married filing jointly $1,036,800 $1,047,200
Single/Head of household $518,400 $523,600
Married filing separately $518,400 $523,600
26% on AMTI* up to amount, 28% on AMTI above amount
Married filing separately $98,950 $99,950
All others $197,900 $199,900

*Alternative minimum taxable income

Kiddie tax: Child’s unearned income
2020 Projected for 2021
Above this amount taxed using parents’ tax rates $2,200 $2,200
IRAs
2020 Projected for 2021
Contribution limits
Traditional and Roth IRAs (combined) $6,000 ($7,000 if age 50 or older) $6,000 ($7,000 if age 50 or older)
Roth IRA income phaseout range (contributions)
Single/Head of household $124,000 to $139,000 $125,000 to $140,000
Married filing jointly $196,000 to $206,000 $198,000 to $208,000
Married filing separately $0 to $10,000 $0 to $10,000
Traditional IRA income phaseout range (deductibility)
1. Covered by an employer-sponsored plan and filing as:
Single/Head of household $65,000 to $75,000 $66,000 to $76,000
Married filing jointly $104,000 to $124,000 $105,000 to $125,000
2. Not covered by plan but filing joint return with covered spouse $196,000 to $206,000 $198,000 to $208,000
3. Married filing separately and either spouse is covered by plan $0 to $10,000 $0 to $10,000
Estate planning
2020 Projected for 2021
Top gift, estate, and generation-skipping transfer (GST) tax rate 40% 40%
Annual gift tax exclusion $15,000 $15,000
Noncitizen spouse annual gift tax exclusion $157,000 $159,000
Gift tax and estate tax applicable exclusion amount $11,580,0001 + DSUEA2 $11,700,0001 + DSUEA2
GST tax exemption $11,580,000 $11,700,000

1Basic exclusion amount

2Deceased spousal unused exclusion amount

 

Continue reading “Key Numbers Projected for 2021”

What is the difference between the child tax credit and the child and dependent care tax credit?

ANSWER:

These credits are quite different. First, the child tax credit. The purpose of this credit is simply to provide tax relief for parents, working or not, who have qualifying children under the age of 17. A qualifying child may be a dependent child, stepchild, adopted child, sibling, or stepsibling (or descendant of these individuals), or an eligible foster child. The child must be a U.S. citizen or resident and must live with you for over half the year. Continue reading “What is the difference between the child tax credit and the child and dependent care tax credit?”

Charitable Giving

Charitable Giving

Charitable giving can play an important role in many estate plans. Philanthropy cannot only give you great personal satisfaction, it can also give you a current income tax deduction, let you avoid capital gains tax, and reduce the amount of taxes your estate may owe when you die.

There are many ways to give to charity. You can make gifts during your lifetime or at your death. You can make gifts outright or use a trust. You can name a charity as a beneficiary in your will or designate a charity as a beneficiary of your retirement plan or life insurance policy. Or, if your gift is substantial, you can establish a private foundation, community foundation, or donor-advised fund.

Making outright gifts

Continue reading “Charitable Giving”