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    Tax Law Changes for 2021 Tax Returns

  • Federal income tax filing deadline

    For tax year 2021, the IRS's deadline to file your taxes is April 18th, 2022.

    If you file your tax return early and owe the IRS money, you will still have to send your payment in to the IRS by this date to avoid any penalties.

  • Delayed refunds for returns claiming certain credits

    The Protecting Americans from Tax Hikes Act of 2015 (the PATH Act), was enacted on December 18, 2015. The PATH Act contains several changes to the tax law that affect individuals, families, businesses and help safeguard against tax fraud.

    The PATH Act mandates that the IRS not issue a refund on tax returns claiming the Earned Income Tax Credit or Additional Child Tax Credit until Feb. 15. The additional time helps the IRS stop fraudulent refunds from being issued to identity thieves and fraudulent claims with fabricated wages and withholdings.

    This applies to the entire refund, not just the portion associated with these credits.

  • Standard deductions

    For 2021, the new law sets the standard deduction at:

    • $25,100 for married individuals filing joint returns and surviving spouses
    • $18,800 for heads of households, and
    • $12,550 for single taxpayers as well as married individuals filing separately.
  • Earned Income Credit

    The earned income credit applies to working taxpayers that have earned income below certain thresholds. The qualification threshold depends on the number of persons in each family. The thresholds in 2021 to qualify for this credit include:

    • No Children:  earnings must be less than $21,427 or $27,377 if married filing jointly.
    • One Child:  earnings must be less than $42,158 or $48,108 if married filing jointly.
    • Two Children:  earnings must be less than $47,915 or $53,865 if married filing jointly.
    • Three or More Children:  earnings must be less than $51,464 or $57,414 if married filing jointly.

    The tax credits themselves have also increased in 2021, with the maximum credits that can be received as indicated below:

    • No Children:  $1502
    • One Child:  $3,618
    • Two Children:  $5,980
    • Three or More Children:  $6,728
  • Advance Child Tax Credit

    The American Rescue Plan Act expands the child tax credit for tax year 2021. The maximum credit amount has increased to $3,000 per qualifying child between ages 6 and 17 and $3,600 per qualifying child under age 6.

    If you're eligible, you could receive part of the credit in 2021 through advance payments of up to:

    • $250 per month for each qualifying child age 6 to 17 at the end of 2021.
    • $300 per month for each qualifying child under age 6 at the end of 2021.

    The expansion of the credit also means it is fully refundable, meaning you can claim the credit even if you don't have earned income or don't owe any income taxes, allows you to receive half of the 2021 estimated credit in advance, and includes children who turn 17 in 2021.

  • Recovery Rebate Credit

    The Recovery Rebate Credit is authorized by the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Any eligible individual who did not receive the full amount of the recovery rebate as an advance payment, also known as an Economic Impact (Stimulus) Payment, can claim the Recovery Rebate Credit.

  • Alternative Minimum Tax

    The Alternative Minimum Tax (AMT) exemption in 2021 is $73,600 for individual filers ($114,600, for married couples filing jointly).

  • Mileage deduction rates
    Category Rate (January to December 2021)
    Business Miles 56 cents per mile
    Charitable Services 16 cents per mile
    Medical Travel 14 cents per mile

    Health Insurance

  • Health Insurance Premium Tax Credit

    If individuals or families purchase health insurance through the Health Insurance Marketplace, they may qualify for the new Health Insurance Premium Tax Credit. To qualify for the credit, your household income must fall between 100% and 400% of the federal poverty line, you may not be claimed as a dependent on any other taxpayer's return, and (if married), you must file jointly. In the case of spousal abuse or abandonment, this requirement may be waived.

  • What is the Health Insurance Marketplace?
  • What are forms 1095-B, 1095-C & 1095-A?