With 2020 thankfully behind us, it’s time once again to look forward to a new year. The pandemic has brought many changes, including changes to state and federal tax rules. Taking stock of how those changes affect you and your business heading into 2021 is important, as much for preparing 2020 returns as for crafting strategies in 2021.
A new year means new tweaks to tax rules. Keeping track of them all is no small task. In this article, Ferguson Timar pulls together the most important dates and figures to know about in 2021.
2021 tax calendar
Date What is due
January 15, 2021 Quarterly estimated business tax payments for the period from September 1 to December 31, 2020.
January 31, 2021 Forms 1099-MISC must be furnished by businesses to their vendors who received non-employee compensation (NEC) in 2020. Qualified forms also need to be filed with the IRS on this date, either in paper copy or electronically.
February 28, 2021 Deadline for businesses to file Forms W2, 1099 and 1099-MISC (among others) with the IRS if they will be submitting paper copies instead of filing electronically. This is also the deadline for filing Form W3, Transmittal of Wage and Tax Statements.
March 15, 2021 2020 IRS tax returns for partnerships and S corporations are due, unless an extension is requested. This is also the deadline for filing a Form 2553 election for a C corporation to be treated as a S corporation for the 2020 tax year.
March 31, 2021 Deadline for businesses to file their Forms W2, 1099 and 1099-MISC (among others) electronically with the IRS.
April 15, 2021 Tax day! April 15 is an important deadline for many types of tax filing:
- Individuals and C corporations using the calendar year for accounting purposes must submit their 2020 state and federal tax returns or submit an application for automatic extension on Form 4868.
- Regardless of whether a return is filed or an extension is requested, most taxpayers must make a tax payment by April 15 to avoid penalties. Taxpayers that are not finished with their returns should make a good faith effort to estimate their tax due.
- Quarterly estimated business tax payments for the period from January 1 to March 31, 2021.
- Final 2018 tax returns—this is the last chance to claim a refund for that year.
June 15, 2021 Quarterly estimated business tax payments for the period from April 1 to May 31, 2021.
September 15, 2021 Quarterly estimated business tax payments for the period from June 1 to August 31, 2021. Partnerships and S corporations that requested an extension must submit their final 2020 returns by this date.
October 15, 2021 Tax returns due for taxpayers that submitted an extension by April 15.
Inflationary adjustments in 2021
In October the IRS issued its inflation adjustments for the 2021 tax year. Here are some of the highlights:
- The penalty for filing late tax returns was increased from $330 to $435.
- The standard deduction for taxpayers who are married and filing jointly the deduction has increased $300 to $25,100. Single taxpayers and those who are married but filing separately have a standard deduction of $12,550, a $150 increase from the prior year.
- For 2021, as well as the 2018 through 2020 tax years, there is no limitation on itemized deductions.
- Marginal rates, which define the income tax brackets for individuals, have been adjusted as follows:
|Rate||Income bracket (Single filers)||Income bracket (for Married Filing Jointly filers)|
|10%||$9,950 or less||$19,900 or less|
|12%||Income over $9,950||Income over $19,900|
|22%||Income over $40,525||Income over $81,050|
|24%||Income over $86,375||Income over $172,750|
|32%||Income over $164,925||Income over $329,850|
|35%||Income over $209,425||Income over $418,850|
|37%||Income over $523,600||Income over $628,300|
- Retirement plan limits have undergone relatively little change from 2020 to 2021. IRA contribution limits in 2021 will remain unchanged: $6,000 for people under 50, or $7,000 for people who are age 50 or older. The same is true of base contribution limits for workplace retirement plans, like 401(k) or 403(b) plans, which are $19,500 once more. Note, however, that the 401(k) catch-up payment limit for individuals who will be 50 or older at some point in 2021 has increased $500 to $6,500.
Ferguson Timar has your back in 2021.
The tax professionals at Ferguson Timar are looking forward to serving you in 2021. Please reach out to us with any questions you have about changes the new year has introduced to the tax rules, to get rolling on your 2020 returns, or to make plans for the coming year. Call us today at (714) 204-0100 or reach out through our contact page.