Here are must-know changes for the 2021 tax season

Should you consider direct indexing in 2022? Here’s what to know

One other 12 months of grappling with coronavirus has led to important tax regulation adjustments for the 2021 season.

Whereas year-end tax planning is at all times necessary, latest changes — and the potential of extra on the horizon — might provide distinctive advantages together with potential pitfalls.

Listed here are a number of the largest adjustments for particular person taxpayers and the best way to put together, in accordance with monetary specialists.

Expanded baby tax credit score

More from Advisor Insight:

Here’s a look at other stories impacting the financial advisor business.

Recipients may tally advanced credits by comparing bank statements to IRS records in the Child Tax Credit Update Portal. They usually might obtain a letter in January summarizing funds.

After that, filers can attempt to estimate 2021 adjusted gross earnings to see in the event that they nonetheless qualify for the funds they acquired.

Nonetheless, if there are lacking credit, Harris suggests beginning the submitting course of early as many taxpayers had 2020 refund delays associated to stimulus funds.

“Get your return filed as rapidly as potential,” he mentioned. “That may not less than get the wheels turning on what might presumably be one other gradual 12 months for IRS processing.”

Charitable deductions

Since most People haven’t got sufficient itemized write-offs to exceed the usual deduction, it has been troublesome to assert the charitable deduction, Harris defined, however the 2021 extension might provide a “good tax break” for non-itemizers.

Medical health insurance premiums

Similar to the child tax credit, filers may project 2021 income now to try and estimate liability and set aside money for a future bill, he suggested.

Required minimum distributions

Source link