Now that the 2021 tax season is underway, it is important to keep key dates in mind to efficiently manage your 2021 tax obligations. Keeping your taxes on track now can also help you to craft a proactive approach to your 2022 taxes. Unfortunately, individuals and business owners often fail to think about their calendar year tax strategies until the year is almost over. Minimize your liability by working through your 2021 taxes with an eye towards your 2022 obligations
Each year, the tax code changes in both minor and significant ways. The knowledgeable team at Ferguson Timar is ready to discuss everything that you’ll need to know to stay on track during the 2021 tax season while looking ahead to the rest of 2022.
Tax filing dates for 2021
During the early phases of the Covid-19 pandemic, the IRS pushed the traditional tax filing dates back. In 2022, tax filing deadlines will return to a relative state of normalcy, with most personal filings due in mid-April. Unless you request a filing extension, you’ll need to submit your personal tax returns for 2021 no later than April 18, 2022. For those who don’t like to wait until the last minute to file, the IRS will begin processing returns on January 24, 2022.
Bear in mind that although April 18 is the last day to file a return or request an extension, the preparation of a return can take time. We recommend our clients submit their paperwork to us at least 30 days in advance of the filing deadline to ensure timely filing.
The IRS is currently processing a lingering backlog from 2021. As a result, processing newly filed 2021 personal returns will take the IRS longer than usual. File as early as you can for timely processing.
Inflationary adjustments for 2021
Every year, certain key tax figures are modified to reflect changes in inflation. The IRS details each 2021 inflation adjustment in this publication. Of particular note are the following changes:
- The standard deduction has increased for both single taxpayers and married couples filing jointly. Single taxpayers and taxpayers who are married but filing separately will benefit from a $150 increase from $12,400 to $12,550. Heads of households will also benefit from a $150 increase from $18,650 to $18,800. Taxpayers who are married and filing jointly will benefit from a $300 increase from $24,800 to $25,100.
- Marginal rates are also adjusted annually. These rates influence the ways in which personal income taxes are calculated. The newly adjusted 2021 income brackets for filers are:
|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 account contribution considerations
IRA contribution amount limits are not changing for the 2021 tax year. However, active participants in employer-sponsored retirement plans will encounter contribution phaseouts for IRAs at the following adjusted gross income (AGI) levels for the 2021 tax year:
- Single filers and heads of households: $66,000 – $76,000
- Taxpayers who are married and filing jointly: $105,000 – $125,000
- Married filers filing separately: $0 – $10,000
Note that the 2020 CARES Act allowance that permitted an early withdrawal of retirement funds up to $100,000 without a 10% early withdrawal penalty has expired. If you made an early withdrawal of retirement funds in 2021, you will likely incur a penalty.
Ferguson Timar can get you on track for 2022
At Ferguson Timar, our priority is to assist clients with their ever-evolving tax needs in efficient, effective, and straightforward ways. When discussing your 2021 tax season needs, we can also consider your 2022 financial situation in order to craft a proactive approach to next year’s tax season. Doing so will allow you to make informed financial decisions for the remainder of 2022.
To complete your 2021 taxes and craft a proactive approach to your 2022 tax year generally, call us today at (714) 204-0100 or reach out through our contact page.