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Changes for Tax Year 2021
American Rescue Plan of 2021 (CARES Act)
- - Provides working families recovery rebates of up to $1,400 per person.
Note - you should have received Letter 6475 from the IRS in January showing how much you received.
You can also look online at
www.irs.gov/coronavirus/get-my-payment.
- - Increases the Child Tax Credit from $2,000 per child to $3,000 per child ($3,600 for a child under age 6) and
makes 17-year-olds qualifying children for 2021.
- - Provides for the advance payment of the child tax credit of $250 per child per month from July 15 through December 15.
Note - you should have received Letter 6419 from the IRS in January showing how much you received. You can also look
online at
www.irs.gov/credits-deductions/advance-child-tax-credit-payments-in-2021.
- - Increases the Earned Income Tax Credit by as much as $1,000.
- - For those who can't itemize deductions, there is an above the line deduction for charitable contributions up to
$300 for single taxpayers and $600 for married taxpayers.
- - Allows for student loan forgiveness programs to be tax-free through 2025.
- - The plan extended unemployment benefits but did not provide for the exclusion of UI from taxable income.
The Consolidated Appropriations Act of 2021, and the CARES Act of 2020 provided the following:
- - For 2021 and 2022, to encourage restaurant dining, businesses can write off 100% of business meals.
- - Permanently reduces the AGI threshold for medical expenses from 10% to 7.5%.
- - Allows purchase of PPE by educators as an education expense, limited to $250.
- - Allows business expenses paid with the proceeds of a forgiven PPP loan to be deductible.
However, California does not conform if you received your PPP after March 31, 2021 (AB80.).
As a reminder, if you are age 72 or older, you must take your Required Minimum Distribution from your IRA by April 18, 2022.
And that is only part of the new laws! All of us at BroadStreet Financial Group have undergone extensive study of all the tax changes and stand ready to navigate you through this myriad of new rules.