Tax deductions

IRS Announces Higher Tax Deductions in 2021 for Inflation-Linked Adjustments

FORT WAYNE, Indiana (DECLINE) – Changes in tax deductions due to inflation adjustments happen to taxpayers in 2021, according to the Internal Revenue Service.

“These aren’t major changes, but taxpayers will notice them,” said Linda Troyer, Tax Pro at Jackson Hewitt. “These are mostly updated limitations. ”

The standard deduction for married couples filing jointly for tax year 2021 is $ 25,100, up $ 300 from the previous year. For single taxpayers and married people filing separately, the standard deduction increases to $ 12,550 for 2021, up from $ 150. For heads of households, the standard deduction will be $ 18,800 for the 2021 tax year, up from $ 150.

Other changes include increasing the limits and the contribution you can make to your retirement accounts.

Even though your 2021 tax filing season is still months away, Troyer said it’s a good idea to start researching your documents now. She recommends that you start collecting your documents throughout the year and start placing items like check stubs and receipts in a folder.

“Don’t wait until next year when you go to file and you are asked where is it,” Troyer said. “That’s why some people have had to file extensions because they waited until tax season was over and then realized they didn’t have the documents.”

While people should be bracing for the upcoming 2021 tax season, there are still people who have yet to file their taxes for 2020.

The IRS reminds taxpayers that the deadline for 2020 tax returns is less than a month away on October 15. This deadline is for those who have requested a filing extension, and it is not an extension to pay your 2020 taxes.

While the IRS has yet to release the number of taxpayers who have taken advantage of the extension, Troyer said she and other tax practitioners have seen an increase.

If you still haven’t received your refund for 2020 or 2019, you’re not alone. Troyer said she had a client who filed her 2020 taxes in March and has yet to receive a refund due to processing delays caused by the pandemic. For example, when an IRS office experiences an outbreak of COVID-19, employees cannot work from home due to the sensitivity of documents.

If you have questions about your 2019 or 2020 tax return, click here.

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