2021 Tax Highlights
Last year brought the pandemic, multiple rounds of stimulus, extended tax due dates, and tax law changes even after the year ended. What is in store for 2021? The trillions of dollars in federal pandemic spending means you need to be prepared for these programs to be rolled back. In this short video, we share what to watch for and how it may impact your tax situation.
- Additional federal unemployment benefits will be stopped and taxpayers will need to be prepared to pay taxes on these benefits.
- Penalty-free withdrawals from retirement accounts due to the pandemic are now gone. You must be prepared to either repay the funds or pay taxes on them as well as a potential penalty for the use of these funds.
- The one-year hiatus from minimum withdrawals from qualified retirements accounts for those ages 72 and older is now expired. Be prepared to take contributions or face penalties.
- One of the biggest impacts of 2021 is the expanded Child Tax Credit. These changes are complicated but we have broken it all down in our Advanced Child Tax Credit Payments and IRS Child Tax Credit Portal blogs.
- Expansion of the earned income tax credit.
- Working couples with daycare expenses also have an expanded benefit.
- Retirement contribution limits are the same for most accounts in 2021.
Stay tuned for potential changes and updates throughout the year. As always, we will be here to answer any questions that you may have.
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About the Author: Shelly Spata, CPA
Shelly Spata joined the firm in 1998, and her name went on the door in 1999. She now serves as the Managing Partner of the firm. "As a business owner myself, I understand the complexities and challenges business owners face, and I strive to add value by helping clients understand their financial statements, manage tax consequences, and clearly see the financial and tax ramifications — both positive and negative — of decisions they make," she explains. "Without good financial information, it’s like driving a car blind, but with good information, clients are able to maximize profits."
