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January’s “Important Tax Information Enclosed”
What documents to look for in January…W-2, 1099s and 1098s. New 1099NEC for self-employed and 1099K for Cryptocurrency.
Frequently Missed Info!
Child Care expenses, Federal & State estimated tax payments, sales of property, college tuition, stock sales, K-1s, Social Security benefits, last pay stub and other miscellaneous items.
Tax Tips For You… Now!
Required Minimum Distributions (RMDs)
· Begin at age 72
· 1st RMD may be delayed to April 1, 2022
Charitable Contribution Deduction Expanded
Up to $300 deduction for Single taxpayers that do not itemize. Married couples filing a joint return are eligible for up to $600 deduction if they do not itemize.
Interest on Series EE or I Savings Bonds can Become Tax-Free
· Bonds purchased after 1989
· Owner at least 24 years old and the taxpayer. Not the student.
· Redeemed to pay college, graduate school or vocational school tuition and fees.
· Subject to income requirements
Advance Child Tax Credit
· Increased from $2,000 to $3,000
· Child age expanded to under 18 years old from under 17 years old
· Children under age 6 eligible for up to $3,600
· Up to ½ of credit sent in advance monthly beginning July 2021 and continuing through 2021
· Adjusted Gross Income limitations
· IRS Letter 6419 will report advance payments to taxpayer
Myth vs. Truth
· All taxpayers with timely filed 2020 tax returns have received their refunds. False!
· Social Security benefits are not taxable. False, sometime taxable based upon other income.
· Easy to write-off gambling losses. False. Only deduct up to amount of winnings and then is an itemized expense on Schedule A.
Social Security Review
COLA of 5.9% expected beginning January 2022. Medicare premiums expected to increase less than $10 per month. Wage base increases to $147,000.
Third Stimulus Payment
Will be reconciled on 2021 Tax Return like 2020 Tax Return reconciliation of first 2 stimulus payments.
Qualified Charitable Distribution (QCD)
· For IRA distributions
· Account holder must be at least 70 ½
· $100,000 limitation
· Counts toward Required Minimum Distribution
Only distributions to IRS recognized charities