![]() ![]() Elementary and Secondary School Teachers Expenses.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).Here’s a look at two of the most popular: Īn above-the-line deduction is one that you can claim even if you don’t itemize your deductions. There are no Pease limitations in 2021.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.Casualty and Theft Losses. The deduction for personal casualty and theft losses has been repealed except for losses attributable to a federal disaster area.The percentage limit for charitable cash donations to public charities remains at 60% for 2o21. 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.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.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.There are changes to itemized deductions found on Schedule A, including: The maximum zero rate amounts and maximum 15% rate amounts break down as follows: Exceptions also apply for art, collectibles and section 1250 gain (related to depreciation). 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. Under the TCJA, your child must pay taxes on their unearned income, but if that amount is more than $1,100, but less than $11,000, you may be able to elect to include that income on your return rather than file a separate return for your child.Ĭapital Gains rates will not change for 2021, but the brackets for the rates will change. Unearned income is income from sources other than wages and salary, like dividends and interest.įor 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). the wolves of Wall Street Don’t miss the daily Term Sheet, Fortune’s newsletter on deals and dealmakers.The kiddie tax applies to unearned income for children under the age of 19 and college students under the age of 24. Bill Gates talked to high schoolers about the secrets to success. “Secret” recession signs may provide clues to when the next downturn is coming -The HENRYs- high earners, not rich yet-may finally be having their moment -A recession may not be likely, but a “semi-recession” is. That shields your loved ones from federal estate and gift taxes when you die. ![]() And people who are over 50 can now contribute up to $6,500.Īnd the lifetime gift and estate tax exemption has climbed to $11.58 million per individual, a $118,000 increase from 2019. (Remember, those balances can be rolled over from one year to the next and can accrue interest tax free.)Ĭontribution limits for 401(k) and 403(b) (along with some 457 plans) jumped from $19,000 in 2019 to $19,500. The individual limit has been raised from $3,500 to $3,550 and the family plan max has jumped $100 to $7,100. If you qualify for a Health Savings Account, you can add a little more. Personal exemptions were also eliminated. The standard deduction is now higher, climbing to $12,400 for singles and $24,800 for married people filing jointly in 2020. The changes don’t stop with the updated tax brackets, though. ![]()
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