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Tax Due Dates

Please note the following tax due dates and come back often to keep up with the changes.

Welcome to the Year 2022: Time to File Your 2021 Tax Return

Tax Brackets and Tax Rates. The tax brackets and tax rates were changed in 2018. There are still seven (7) tax rates. They are: 10%, 12%, 22%, 24%, 32%, 35% and 37%. Followings are the details of these brackets and rates:

Taxpayers should be aware of the following dates and deadlines that pertain to their business:

March 15 - Partnerships and S Corporate tax returns are due.

April 15 - C Corporation & Personal (1040) tax returns are due

September 15 - This is the final deadline for extended Partnerships, C Corporations and SCorporations.

Note: Business returns filing deadlines were changed by IRS last year (2019)

This is the due date for the tax return and also for the Schedules K-1 that the entity must provide to its owners. This change actually makes more sense, intuitively: Both S corporations and partnerships are flow through entities, while C corporations are completely separate entities from their owners. Changing the due dates so both partnerships and S corporations (the flow through) is March 15 gives the individual owners of those entities one month to use the tax information from the entity filing for their individual income tax returns, which is due April 15 It also makes more sense for the C corporation returns due date to be April 15 because there is no flow through aspect of C corporations, so that corporate tax filing is not necessary prior to filing the shareholders’ individual tax returns.

Tax calendar for 2021 & 2022

Tax Rates

There are still seven (7) tax rates in 2021. They are: 10%, 12%, 22%, 24%, 32%, 35% and 37%.

Here's how those break out by filing status. These are the tax rates use to prepare 2021 tax returns in 2022:

Tax rates for trusts and estates have also changed as follows:

The standard deduction amounts will increase to $12,550 for individuals and married couples filing separately, $18,800 for heads of household, and $25,100 for married couples filing jointly and surviving spouses.

    • For 2021, the additional standard deduction amount for the aged or the blind is $1,350. The additional standard deduction amount increases to $1,700 for unmarried taxpayers.

    • For 2021, the standard deduction amount for an individual who may be claimed as a dependent by another taxpayer remains the same. It is cannot exceed the greater of $1,100 or the sum of $350 and the individual’s earned income (not to exceed the regular standard deduction amount).

Note: There will be no personal exemption amounts for 2021. The personal exemption amount was set to zero (0) under the Tax Cuts and Jobs Act (TCJA).

The alternative minimum tax (AMT) exemption amounts are adjusted for inflation. Here’s what those numbers look like for 2021:

Kiddie Tax.The kiddie tax applies to unearned income for children under the age of 19 and college students under the age of 24. Unearned income is income from sources other than wages and salary, like dividends and interest.

For 2021, the standard deduction amount for an individual who may be claimed as a dependent by another taxpayer cannot exceed the greater of (1) $1,100 or (2) the sum of $350 and the individual’s earned income (not to exceed the regular standard deduction amount).

Capital Gains rates will not change for 2021, but the brackets for the rates will change. Most taxpayers pay a maximum 15% rate, but a 20% tax rate applies if your taxable income exceeds the thresholds set for the 37% ordinary tax rate. Exceptions also apply for art, collectibles and section 1250 gain (related to depreciation). The maximum zero rate amounts and maximum 15% rate amounts are as follows

Tax Credits and Deductions

There are significant changes to itemized deductions found on Schedule A, including:

• Medical and Dental Expenses. The “floor” for medical and dental expenses is 10% in 2021, which means you can only deduct those expenses which exceed 10% of your AGI.

• State and Local Taxes. Deductions for state and local sales, income, and property taxes remain in place and are limited to a combined total of $10,000, or $5,000 for married taxpayers filing separately.

• Home Mortgage Interest. You may only deduct interest on acquisition indebtedness—your mortgage used to buy, build or improve your home—up to $750,000, or $375,000 for married taxpayers filing separately.

• Charitable donations. The percentage limit for charitable cash donations to public charities remains at 60% for 2021.

• Casualty and Theft Losses. The deduction for personal casualty and theft losses has been repealed except for losses attributable to a federal disaster area.

• Job Expenses and Miscellaneous Deductions subject to 2% floor Miscellaneous deductions, including unreimbursed employee expenses and tax preparation expenses, which exceed 2% of your AGI have been eliminated.

• There are no Pease limitations in 2021.

Some additional tax credits and deductions were adjusted for 2021 or altered under the conference bill. Here's a look at a few of the most popular:

• Child Tax Credit. The 2021 CTC is different than before in 6 keyways, and this is a temporary one-year expansion of the CTC for your 2021 tax return (which you file in 2022):

  
  

  1. Increases the tax credit amount. The tax credit’s maximum amount is $3,000 per child and $3,600 for children under 6.

  2. Makes the credit fully refundable. Even if you don’t owe taxes, you could get the full CTC refund.

  3. Removes the minimum income requirement. You can have zero income and still claim the CTC.

  4. Raises the qualifying age. Children 17 and under can qualify for the credit.

  5. Provides advance payments. If you already qualify for the current CTC when you filed your 2020 tax return (which you file in 2021), you can start receiving part of the new credit during 2021. You don’t have to wait until you file your 2021 tax return (which you file in 2022). The IRS will send you monthly payments for half your new credit between July and December 2021.

  6. Lowers the phase out rate. The CTC amount will start to gradually decrease starting at $75,000 ($150,000 for married couples and $112,500 for head of household).

  
  

• Earned Income Tax Credit (EITC). For 2021, the maximum EITC amount available is $6,728 for married taxpayers filing jointly who have three or more qualifying children.

  The EITC was recently increased and expanded to people not raising children between 19-24 and 65 and over. Following is The Earned Income Tax Credit in Tax Year 2021

  Number of children:	Single workers with income less than:	Married workers with income less than:	EITC up to:
  3 or more children	$51,464	$57,414	$6,728
  2 children	$47,915	$53,865	$5,980
  1 child	$42,158	$48,108	$3,618
  No children	$21,430	$27,380	$1,502

  You cannot get the EITC if you have investment income more than $10,000 in 2021. Investment income includes taxable interest, tax-exempt interest, and capital gain distributions.

• Adoption Credit. For 2021, the credit for an adoption of a child with special needs is $14,440, and the maximum credit allowed for other adoptions is the amount of qualified adoption expenses up to $14,440. The available adoption credit begins to phase out for taxpayers with MAGI in excess of $216,660; it’s completely phased out at $256,660 or more.

• Student Loan Interest Deduction. For 2021, the $2,500 deduction for interest paid on student loans begins to phase out when modified adjusted gross income (MAGI) hits $70,000 ($140,000 for taxpayers filing a joint return) and is completely phased out when MAGI hit $85,000 ($170,000 for taxpayers filing a joint return).

• Lifetime Learning Credit. For the 2021 tax year, the credit begins to phaseout once MAGI is $59,000 ($119,000 for taxpayers filing a joint return). The credit is completely phased out for taxpayers with MAGI in excess of $69,000 ($139,000 for taxpayers filing a joint return).

• Medical Savings Accounts (MSA). For 2021, a high-deductible health plan (HDHP) is one that, for participants who have self-only coverage in an MSA, has an annual deductible that is not less than $2,400 but not more than $3,600; for self-only coverage, the maximum out-of-pocket expense amount is $4,800. For 2021, HDHP means, for participants with family coverage, an annual deductible that is not less than $4,800 but not more than $7,100; for family coverage, the maximum out-of-pocket expense limit is $8,750.

• shared individual responsibility payment There is no shared individual responsibility payment for the tax year 2021.

• Foreign Earned Income. For 2021, the foreign earned income exclusion amount is $108,700.

• As part of the TCJA, sole proprietors and owners of pass-through businesses are eligible for a deduction of up to 20% to bring the tax rate lower for qualified business income. The deduction is subject to threshold and phase-in amounts. For 2021, those amounts will look like this:

  

• Revocation or Denial of Passport For 2021, the threshold amount for seriously delinquent tax debt before your passport is certified to the State Department to be revoked is $54,000.

• Gift Tax Exclusion (& Foreign Gifts) The annual exclusion for federal gift tax purposes will remain at $15,000 in 2021. That means that you can gift $15,000 per person to as many people as you want with no federal gift tax consequences in 2021; if you split gifts with your spouse, that total is $30,000. The exclusion amount for gifts to a spouse who is not a citizen of the United States (other than gifts of future interests in property) is $159,000.

Businesses

One of the most significant changes under tax reform is the tax treatment of businesses and these are permanent and fairly comprehensive.

Corporate tax rates, like individual tax rates, are progressive. For 2017, corporate rates range from 15% to 39% (except for personal service corporations which are taxed at 35%) while individual tax rates range from 10% to 39.6%.

The new tax law now provides for a flat 21% tax rate for corporations. For Pass through entities, business income that passes through to an individual from a pass-through entity and income attributable to a sole proprietorship will be taxed at individual tax rates less a deduction of up to 20% to bring the rate lower.

It sounds easy, but it quickly can become tricky since the deduction is subject to limits and restrictions. To understand those, you need some definitions:

• Qualified business income (QBI). QBI is generally net income from your business without regard for any amount paid by an S corporation that is treated as reasonable compensation, any guaranteed payment for services in business, or any amount paid or incurred to a partner for services outside his or her capacity as a partner. You'll use the "normal" rules when figuring QBI, so capitalize and amortize expenditures accordingly. One last note: QBI is determined on a per business, not a per taxpayer, basis.

• Qualified property. Qualified property is tangible property (typically, things you can touch) subject to depreciation and available for use in your business at the end of the tax year. You must use the property to produce qualified business income (as defined above).

• Specified service trade or business. A specified service trade or business is any business involving the performance of services in the fields of health, law, consulting, athletics, financial services, brokerage services, or "any trade or business where the principal asset of such trade or business is the reputation or skill of one or more of its employees or owners." If the success of your business depends on you and not on something that you sell, you're pretty much included (except for engineering and architecture services, which were specifically excluded).

• Threshold amount. . The threshold amount is the amount above which both the limitation on specified service businesses and the wage limit apply. The threshold amount is $164,925 for individual taxpayers and $329,800 for married taxpayers filing jointly. Phase-ins apply: that means that the benefit decreases as income increases.