Our 2021 Handy Tax Guide is an easy-to-use reference that contains up-to-date facts to help guide you through this year.

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  • Individual Income Tax Rates
    Married Taxpayers Filing Jointly or Surviving Spouses
    Taxable Income Over But Not Over Is Taxed At
    $0 $19,900 10%
    $19,900 $81,050 12%
    $81,050 $172,750 22%
    $172,750 $329,850 24%
    $329,850 $418,850 32%
    $418,850 $628,300 35%
    $628,300 37%
    Single Taxpayers
    Taxable Income Over But Not Over Is Taxed At
    $0 $9,950 10%
    $9,950 $40,525 12%
    $40,525 $86,375 22%
    $86,375 $164,925 24%
    $164,925 $209,425 32%
    $209,425 $523,600 35%
    $523,600 37%
    Heads of Household
    Taxable Income Over But Not Over Is Taxed At
    $0 $14,200 10%
    $14,200 $54,200 12%
    $54,200 $86,350 22%
    $86,350 $164,900 24%
    $164,900 $209,400 32%
    $209,400 $523,600 35%
    $523,600 37%
    Estates & Trusts
    Taxable Income Over But Not Over Is Taxed At
    $0 $2,650 10%
    $2,650 $9,550 24%
    $9,550 $13,050 35%
    $13,050 37%
    Alternative Minimum Tax
    Tax Rate on AMTI 26% up to $199,900
    28% over $199,900
    Exemption Amount Phase-Out Threshold
    Married Filing Jointly $114,600 $1,047,200
    Married Filing Separately $57,300 $523,600
    All Individual Tax Payers $73,600 $523,600
  • Deductions & Exemptions
    Standard Deduction* Elderly or Blind**
    Married Filing Jointly $25,100 $1,350
    Single $12,550 $1,700
    Head of Household $18,800 $1,700
    Married Filing Separately $12,550 $1,350
    Dependent of Another $1,100

    *You are allowed to deduct the greater of your standard deduction or your itemized deductions.

    Personal Exemptions - Repealed Deduction Limitations

    Section 199A Qualified Business Income Deduction: 20% of domestic qualified business income (multiple limitations apply).

    Medical & Dental Expenses: Excess over 7.5% AGI.

    State & Local Taxes: $10,000 maximum deduction.

    Mortgage Interest Deduction: Limited to $750,000 of principal for post 12/15/17 acquisition indebtedness.

    Deductions Repealed (as of Jan 1, 2018)
    • Miscellaneous itemized deductions
    • Interest on home equity indebtedness
    • Moving expenses
    Credits

    Tax credits of $2,000 per child and $500 per non-child dependent begin to phase out for taxpayers with modified adjusted gross income exceeding $400,000 for joint and $200,000 for single filers.

  • Estimated Tax Payments

    To avoid possible underpayment penalties, you are generally required to pay in through withholding or estimated tax payments the lesser of:

    1. One hundred percent of prior-year tax liability, (110% if AGI >$150,000) or,
    2. Ninety percent of current-year tax liability.
    2021 Estimated Tax Payments for Individuals are due by:
    • April 15, 2022
    • June 15, 2022
    • September 15, 2022
    • January 17, 2022
  • Net Investment Income Medicare Surtax

    The net investment income surtax on individuals equals 3.8% of the lesser of:

    • Net investment income*, or
    • The excess, if any, of
    • The individual’s modified adjusted gross income, over the threshold amount.
    Filing Status Threshold Amount
    Married Filing Jointly $250,000
    Married Filing Separately $125,000
    Single, Head of Household $200,000

    *Common types of “net investment income” include interest, dividends, annuities, royalties, rents, net capital gain on investments, passive activities.

  • Capital Gain & Qualified Dividend Tax Rates for Noncorporate Taxpayers
    Single Taxpayer Married Filing Jointly Capital Gain Tax Rate* Net Investment Income Medicare Surtax** Combined Tax Rate
    $0-$40,400 $0-$80,800 0% 0% 0%
    $40,401-$200,000 $80,801-250,000 15% 0% 15%
    $200,001-$445,850 $250,001-$501,600 15% 3.8% 18.8%
    $445,851 $501,601 20% 3.8% 23.8%

    * Short-term capital gains (held less than 12 months) are taxed at the same rate as ordinary income, gains on collectibles (including metals) are taxed at 28%, recapture gains on real estate are taxed at 25%.

    ** The 3.8% Net Investment Income Medicare surtax only applies to “net investment income” as defined in IRC 1411.

  • Estate Tax Rates

    The estate tax and gift tax exemption for 2020 is $11.7 million. The estate and gift tax rate on amounts in excess of $11.7 million is 40%. The estate tax exemption is portable between spouses resulting in a $23.4 million exemption per couple regardless of ownership of assets.

    Annual Gift Tax Exclusion

    Gifts per person, $15,000

    Joint gifts by spouse, $30,000

  • Business Provisions
    • Corporate income taxed at a flat rate of 21%.
    • Corporate Alternative Minimum Tax repealed.
    • Five-year carry back of net operating losses allowed for losses arising in 2018, 2019, 2020.
    Deductions Repealed
    • Business Entertainment Expenses
  • Employment Tax Rates
    Employer Tax Rate Wage Base
    Social Security 6.20% $142,800
    Medicare +1.45% No Limit
    =7.65%
    Employee Tax Rate Wage Base
    Social Security 6.20% $142,800
    Medicare +1.45% No Limit
    =7.65%
    Self Employed Tax Rate Wage Base
    Social Security 12.40% $142,800
    Medicare +2.90% No Limit
    =15.30%

    *Additional 0.9% Medicare tax is imposed on individuals who receive wages or self-employment income in excess of $200,000 ($250,000 for joint return, $125,000 for married filing separate).

  • Depreciation/Amortization

    3 – Year Assets (200% DB) Dies, molds, small tools

    3 – Year Assets (Straight-line) Computer software (if separately stated from hardware)

    5 – Year Assets (200% DB) Autos, light-/heavy-duty trucks, computers, typewriters, copiers, medical equipment, construction equipment, wholesale/retail equipment, private aircraft, some manufacturing equipment

    7 – Year Assets (200% DB) Most manufacturing equipment, office furniture, printing equipment

    15 – Year Assets (Straight-line) Intangible assets including goodwill, going concern value and covenants not to compete. Qualified improvement property

    27.5 – Year Assets (Straight-line) Rental houses, apartments, low-income housing

    39 – Year Assets (Straight-line) Commercial and industrial buildings, office buildings, shopping centers, warehouses, manufacturing facilities

    Annual Recovery

    Percent of Original Depreciable Basis Under 200% DB Method

     

    Recovery Year 1 2 3 4 5 6 7 8
    Class
    3 Year 33.33 44.45 14.81 7.41
    5 Year 20.00 32.00 19.20 11.52 11.52 5.76
    7 Year 14.29 24.49 17.49 12.49 8.93 8.92 8.93 4.46
    Section 179 Expense Deduction

    Small Business taxpayers may elect to expense $1,050,000 million of certain new or used qualifying depreciable property placed in service in tax year 2021. Deduction is phased-out if the cost of qualifying property placed in service during the year exceeds $2.62 million.

    Special (Bonus) Depreciation Allowance

    Bonus depreciation allowance can be claimed for qualified property placed in service:

    • 100% for 2018 through 2022
    • 80% for 2023
    • 60% for 2024
    • 40% for 2025
    • 20% for 2026
    2021 Standard Mileage Deductions

    Use:

    • Business, $0.56 per mile
    • Charitable, $0.14 per mile
    • Medical or moving purposes for qualified active duty members of the Armed Forces, $0.16 per mile
  • Retirement Plan Limits
    Individual Limitations
    Under Age 50 Age 50 & Up
    IRA $6,000 (a) $7,000 (a)
    Roth IRA $6,000 (b) $7,000 (b)
    401(k)/SARSEP Salary Deferrals $19,500 $26,000
    Simple Plans $13,500 $16,500

    PROFIT SHARING PLANS

    Corporate, 100% up to $58,000 (c)

    SEP – self-employed, 20% up to $58,000 (d)

    SEP – employee……………………….25% up to $57,000

    (a) Phaseout for deducting IRA contributions (qualified plan participants):

    Joint: $105,000 – $125,000 AGI
    Single or HOH: $66,000 – $76,000 AGI

    (b) Phaseout of Roth contribution eligibility:

    Joint: $198,000 – $208,000 AGI
    Single or HOH: $125,000 – $140,000 AGI

    (c) Overall plan is limited to 25% of total compensation of all eligible employees (capped at $285k per employee).

    (d) Of net self-employed income after 1/2 self-employment tax deduction (capped at $290k per employee).

  • Social Security Benefits

    Minimum earned income limit:

    Annual Monthly
    Ages 62-65 years $18,960 $1,580
    Months before individual reaches age 66 $50,520 $4,210
    Months after age 66 No Limit No Limit
  • Taxable Social Security

    Social Security received is taxable if AGI, plus tax-exempt interest, plus one-half of Social Security received, exceeds these base amounts:
    The taxable amount is the lesser of:
    a. Percent of the excess over the base amount, or
    b. 85% of benefit received

    Base Amount For 50% Over Base 85% Over Base
    Married Filing Jointly $32,001-$44,000 $44,001+
    Single/Head of Household $25,001-$34,000 $34,001+
    Married Filing Separately $0 $0