2022 tax brackets
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2021 Tax Rates for Individual Income Tax (Returns Filed in 2022)
2021 tax brackets
2021 New Tax Law Changes (Returns filed in 2022)
REMINDER: Put all your tax documents into your green A Tax Haven bag as they come in the mail!
***There have been multiple changes for the 2021 filing season:
including additional pages of tax forms, extending some credits and rules while removing many others, as well as the addition of several new rules and credits just for the 2021 filing season!
You may now qualify for some credits that you may not have qualified for in the past!
The best way to gather all of your tax data!
Here are some tax reform laws to be aware of and some strategies to use by the end of the year:
- Be Generous -2021 Non-Itemizer Donation Rules
- FOR 2021 ONLY- like 2020, you are able to take a tax deduction for charitable donations of money to a qualified organization even if you don’t have enough deductions to itemize! For 2021- the credit of $300 for single taxpayers & $600 for couples is deductible after AGI, and the cash contribution limit is also increased to 100% for Schedule A itemizers.
- It’s important to remember that you MUST have a receipt to back up your contributions! This will be an audit spot so be sure to print and keep those receipts!
- Reduce Your Taxable Income by Contributing to Retirement Plans
- Max Out your Retirement Plans by December 31st
- Check with your employer for guidelines on your current 401K/403B
- Contribute to your IRA / SEP IRA
- If you are self-employed, you can also set up a SIMPLE or SEP
- Remember, for those over 50, you can add an additional $1000 catch-up amount to your IRA contributions
- Contributing to your retirement may also make you eligible for a Saver’s Credit of up to $1,000
- Max Out your Retirement Plans by December 31st
- Miss the December 31st deadline? You can still contribute to your IRA or ROTH IRA by April 18, 2022, for the 2021 year.
- Required Minimum Distributions for those 72 or older are required in 2021. Check with your retirement company if you haven’t already taken your RMD for the year.
- Postpone Income
- While it may be difficult to postpone wages or salaries, try to defer a year-end bonus to be paid out in January of the new year. Just make sure this is standard practice for your company.
- If you are self-employed or are a freelancer/consultant, you can delay billings until late December to ensure you don’t receive payment until the new year.
- Keep in mind that if you anticipate additional income for the new year, it could push you into a higher tax bracket then, so use this tip with caution.
- Business Owners Can Eat Out Again
- For 2021 & 2022 ONLY- Business Meals purchased in restaurants can be deducted at 100%!
- Reminder – business meals must have been incurred while traveling out of town on business or be provided for clients, customers, or employees while business is discussed and tips are included
- Children Credits Large Increase- Child Tax Credit, Earned Income Credit, Dependent Care Credit
- For 2021 ONLY- the CTC, EIC, & DCC have all increased and been made more refundable
- For 2021, there have been numerous changes made to these credits, including EIC age requirements without children & CTC available for dependents up to age 17
- The Kiddie Tax is back in action for dependents with unearned income over $2200
- The EIC for 2021 & beyond has increased the investment income limitation to $10,000
- Economic Impact Payments & Child Tax Credits Pre-Payments
- For 2021, taxpayers will be required to reconcile their 3rd Stimulus EIP Payment on their tax return. This was received in approximately March/April or later in 2021 and was up to $1400 per person. You will need to know the amount received for your taxes.
- For 2021, some taxpayers received an advance payment of CTC in July through December. This will have to be reconciled on the tax return, as well.
- **In January 2022, the IRS will send you Letter 6419 to provide the total amount of advance Child Tax Credit payments that were disbursed to you during 2021. Please keep this letter regarding your advance Child Tax Credit payments with your tax records.
- College
- You may be eligible for the American Opportunity Tax Credit or the Lifetime Learning Credit if you are a college student
- If you pay for college courses for the first quarter/semester of the new year by December 31st, you may be able to increase your credit if you did not have enough tuition already paid to meet the $4,000 needed for the maximum credit
- Student loan interest can also be deducted up to $2,500 if you are making payments.
- Loss Harvesting
- Sell investments to offset taxable gains – dollar for dollar
- If you still have a capital net loss, up to $3,000 can reduce other taxable income.
- More than $3,000 can be carried over to the next tax year!
- Through 2025- excess business losses can be used against other types of income
- Net Operating Losses also have new rules in 2021- they are limited to 80% of taxable income, are not available for carryback, and NOLs from 2018 forward can be carried forward indefinitely until used up
- Health and Dependent Care Flex Spending Accounts
- Flex accounts avoid income tax and social security taxes so they are a benefit to you, but not taxable to you
- For 2021, there are different rules allowing more carryovers of funds to the new year
- Maximize Itemized Deductions – Reminder- You can often itemize on your AR return even if you don’t have enough to itemize on the federal return!
- The standard deduction has increased this year, up to $12,550 single (or $25,100 if you are married and filing jointly OR $18,800 for Head of Household). If your deductions are right at those max amounts, here are some options for you:
- Donate more to charity
- Pay additional medical bills, but keep in mind the medical floor is anything over 7.5% of your AGI – which has been made a permanent law now
- Pay additional state, real estate, or personal taxes by combining years
- The standard deduction has increased this year, up to $12,550 single (or $25,100 if you are married and filing jointly OR $18,800 for Head of Household). If your deductions are right at those max amounts, here are some options for you:
- Unemployment in 2021
- Unemployment in 2021 is taxable income at this time. In 2020, up to $10,200 of unemployment was not taxable
- Mileage Deductions for 2021- some actually lowered!
- Standard Mileage Rates for:
- Business 56 cents
- Charitable 14 cents
- Medical 16 cents
- Moving 16 cents
- Depreciation 26 cents
- 1099 NEC- Non Employee Compensation
- Reminder- 2020 and beyond- Contract laborers should receive their income on a form 1099-NEC instead of a 1099-Misc
- IRS Online Tax Accounts – irs.gov
- You can set up your online tax account to view your balance, download IRS notices and letters, make and view payments, and to access tax records. You will need to be able to verify your identity with them first.
- You can also request an IPIN- a six digit number assigned to eligible taxpayers to prevent the misuse of their social security number on fraudulent tax returns. This number is reissued each year and must be used on your tax return to file.
- Social Security Online Accounts – ssa.gov
- You can set up this account to verify your earnings are showing correctly on your social security account and to see other information about your social security.
2019 Tax Rates for Individual Income Tax (Returns Filed in 2020)
2019 federal income tax brackets
(for taxes due in April 2020, or in October 2020 with an extension)
| Tax rate | Single | Married, filing jointly | Married, filing separately | Head of household |
|---|---|---|---|---|
| 10% | $0 to $9,700 | $0 to $19,400 | $0 to $9,700 | $0 to $13,850 |
| 12% | $9,701 to $39,475 | $19,401 to $78,950 | $9,701 to $39,475 | $13,851 to $52,850 |
| 22% | $39,476 to $84,200 | $78,951 to $168,400 | $39,476 to $84,200 | $52,851 to $84,200 |
| 24% | $84,201 to $160,725 | $168,401 to $321,450 | $84,201 to $160,725 | $84,201 to $160,700 |
| 32% | $160,726 to $204,100 | $321,451 to $408,200 | $160,726 to $204,100 | $160,701 to $204,100 |
| 35% | $204,101 to $510,300 | $408,201 to $612,350 | $204,101 to $306,175 | $204,101 to $510,300 |
| 37% | $510,301 or more | $612,351 or more | $306,176 or more | $510,301 or more |
The IRS has announced the e-file starting date for 2019 tax returns (filed in 2020)…
The IRS has announced that they will begin accepting and processing all 2019 individual tax returns on Monday, January 27, 2020. A Tax Haven can still prepare returns as soon as taxpayers receive their current tax documents, and the returns will be transmitted and held until the IRS begins accepting them. Taxpayers do need to make sure they have received all of their relevant tax documents before filing—- W2s (even for a short-term job), 1099s, Mortgage Interest, 1095A for Marketplace Health Insurance, Stock Sales, Education Forms/ 1098Ts, Interest and Dividends Earned, etc.
When the IRS starts processing returns, acknowledgments may be unpredictable due to the high volume of returns being processed. Those with the Earned Income Tax Credit (EITC) or Child Tax Credit (CTC) are also likely to have their refunds delayed, since the IRS now gives extra attention to these credits. For e-filed returns with direct deposit (that do not have EITC or CTC or other specialty credits), it is estimated for the deposits to be 7-14 days from the day the return is accepted by the IRS.
Taxpayers can use the “Where’s My Refund?” tool on the IRS website (irs.gov) to keep an eye on their anticipated refund once they have filed their returns!
Own A Small Business? Here’s What You Need To Know…
Own A Small Business? Here’s What You Need to Know
Running your own business can be time-consuming and stressful — don’t let bookkeeping and accounting tasks make it more so!
Know What You’re Talking About
Here are some common, but important terms that you may not be familiar with:
Sale Money In – This is a transaction you receive payment for.
Expense Money Out – This is something you pay for like rent or business supplies.
Liability This is something you owe money on that your company owns (computer, printer, etc.)
Revenue Revenue is income from sales. Deducting expenses from revenue tells you the profit.
Account Receivable Money that your customers owe based on invoices you send out.
Prepare to Create Your Business Plan and Allocate Funds with These Documents:
Balance Sheet
This shows your assets, liabilities, and owner’s equity. Equity is the value of business assets less the liabilities. In short, it tells you how much your company is worth.
Profit and Loss Statement
A profit and loss statement is usually completed quarterly. It gives you a quick summary of your profits (or losses) for a particular time period. This tells you if your business is profitable and by how much.
Cash Flow Statement
Your cash flow is divided into categories based on operating expenses, investments into business assets, and personal investments/borrowed money to fund your business.
Don’t Mix Business and Pleasure
It’s cliché, but extremely important in owning your own business. Start by setting up a bank account specifically for your company. Keep it (and any business related transactions) 100% separate from your personal accounts.
Every Penny Counts
Track every single expense! This is very important to monitor profit and loss, as well as keeping things simple for tax purposes. This means keeping receipts from all purchases and goes hand in hand with having a separate bank account for your company.
Two Copies are Better Than None
If you’ve ever found yourself searching desperately for a misplaced document, you’ll understand the importance of this tip. Scanning and saving to a digital record is the easiest way to ensure you always have a copy that is accessible when you need it.
Be sure to include Bank and Credit Card Statements, Cancelled Checks, Receipts (for sales and expenses), Bills, Customer Invoices and Payments, Deposit Slips, Tax Returns, Payroll Documentation (including 1099 and W2 forms).
You can choose to hand file these documents, but keep in mind that receipts and other documents may fade over time, making them impossible to read!
Stay Up To Date on All Cash Flow
Just because you sent an invoice doesn’t mean you were paid. By keeping accurate records, you can quickly catch any unpaid invoices to make sure your expenses are covered – and your services weren’t just given away!
Be Prepared
While you can’t predict the future, you can prepare for unexpected expenses or periods of lesser profit. Just as you should have a separate bank account for your business, you should also have a separate emergency fund. It should contain enough cash to cover your expenses for a minimum of three months, although six is preferable.
As much as possible, pay your expenses with cash (or debit). You may have less to take home in the beginning, but operating debt free will ultimately leave you with less risk and more profit. Avoid using credit cards or business loans when not absolutely necessary.
Plan Ahead for Tax Time
All of the previous tips help you achieve this goal – don’t be caught by surprise when you file your small business taxes.
Income Tax: These returns are based on your business structure, whether a sole proprietorship, an LLC, or a C/S Corporation. Check with a tax professional to see how your business structure will affect how you file.
Payroll Tax: You must also file payroll tax returns if you have employees. You must deposit these funds monthly and report quarterly. You’ll need a Federal Employer Identification Number, as well as a State Identification Number for each state where your business operates.
Sales Tax: This is another area where it can get tricky. You need to collect sales tax from each customer if you sell products. However, this varies by state, county, and city – even more so if you operate more than one location or sell items online.
A Professional Can Be a Valuable Resource
Small errors can be easily overlooked by an inexperienced person – and those errors can be costly. Even if only on a temporary or periodic basis, it is very helpful to have an experienced professional on your side, particularly someone who keeps up to date on the ever-changing tax laws.
Heather Worrell, of A Tax Haven, has decades of experience in business tax preparation and planning, as well as bookkeeping. She is an Enrolled Agent, which requires a comprehensive exam covering individual and business tax laws, as well as continuing education requirements. This also allows her to represent a client before the IRS in audits.
Call for an appointment today at 501-262-1040.
What You Need to Know About the New Tax Laws
What You Need to Know About the New Tax Laws
Here are some strategies to use by the end of the year so that you can use the tax reform laws to your advantage.
- Reduce Your Taxable Income
- Max out your 401(k) by December 31st
- Up to $18,500, or $24,500 if you are 50 or over!
- Contribute up to $55,000 into a SEP IRA for 2018
- This is only applicable to those who are self-employed.
- Miss the December 31st deadline? You can still contribute to
your IRA and get a tax deduction.
- This tip is good until the tax filing deadline, up to $5,500 or $6,500 if you are 50 or over.
- Contributing to your retirement may also make you eligible for a Saver’s Credit of up to $1,000 (or $2,000 if you are married and filing jointly)!
- Max out your 401(k) by December 31st
- Be Generous
- Instead of donating cash, choose appreciated stock or property to supercharge your tax benefits.
- You get DOUBLE the benefit if you have owned the asset for more than one year, by deducting the property’s marked value on the date of the gift. This way, you also avoid paying capital gains tax on the appreciation.
- It’s important to remember that you MUST have a receipt to back up any contribution of any amount.
- Pre-Pay for College
- If you pay for college courses for the first quarter/semester of 2019 by December 31st, you may be eligible for the Lifetime Learning Credit of up to $2,000 per return.
- This may also be applicable if you are paying
for another college student in your family.
- This would be through the American Opportunity Tax Credit of up to $2,500 for the first four years of college.
- Student loan interest can also be deducted up to $2,500 if you are making payments.
- Loss Harvesting
- Sell investments to offset taxable gains – dollar for dollar.
- If you still have a net loss, up to $3,000 can
reduce other taxable income.
- More than $3,000 can be carried over to the next tax year!
- Postpone Income
- While it may be difficult to postpone wages or salaries, try to defer a year-end bonus to be paid out in January. Just make sure this is standard practice for your company.
- If you are self-employed or are a freelancer/consultant, you can delay billings until late December to ensure you don’t receive payment until 2019.
- Keep in mind that if you anticipate additional income for the 2019 tax year, it could push you into a higher tax bracket. In that scenario, you may end up paying higher taxes next year, so use this tip with caution.
- Make the Most of Your Flex Spending Account
- Flex accounts avoid income tax and social security taxes. As you may know, you lose anything you don’t use.
- Your employer may allow you to spend money set aside in 2018 as late as March 15, 2019, if they have a grace period as permitted by the IRS.
- If all else fails, you can try using up your funds before the end of the year to avoid losing the excess.
- Maximize Deductions if You Can No Longer Itemize
- The standard deduction has increased this year,
up to $12,000 (or $24,000 if you are married and filing jointly). If your
deductions are right at those max amounts, here are some options for you:
- Donate more to charity
- Use donor-advised funds for charitable donations, instead of bunching donations – you can recommend how to distribute the money to your favorite charity.
- Bunch itemized deductions, but keep an eye on anything that is deductible over 7.5 percent of your AGI for 2018. If you are almost there, getting in a last minute doctor visit can help.
- The standard deduction has increased this year,
up to $12,000 (or $24,000 if you are married and filing jointly). If your
deductions are right at those max amounts, here are some options for you:
These following apply to deductions that have been eliminated.
- Moving Expenses
- The new tax laws do not allow job-related moving expenses to be deducted unless you are an active duty member of the military. Instead, negotiate a moving reimbursement with your employer.
- Keep in mind that you can still deduct mortgage
interest and property taxes.
- There is a cap of $10,000 for property taxes, state income, and state and local taxes combined.
- Dependent Exemption
- The $4,050 dependent exemption is no longer allowed. However, if you send your kids to camp over the holidays while you work, you can get a Child and Dependent Care Credit of up to $1,050 for one child or $2,100 for two or more children.
- The child tax credit has also been doubled to $2,000 per dependent under 17.
- Employee Expenses That Are Not Reimbursed
- Itemization of miscellaneous expenses, such as for classes, have been eliminated.
- You can still take advantage of educational tax credit like the American Opportunity Tax Credit (up to $2,500) or the Lifetime Learning Credit (up to $2,000).
2018 Tax Rates for Individual Income Tax (Returns Filed in 2019)
2018 Tax Rates for Individual Income Tax Returns (Filed in 2019)
The Federal income tax has 7 rates: 10%, 12%, 22%, 24%, 32%, 35%, and 37%. The amount of tax you owe depends on your income level and filing status.
NOTE: There are no personal exemption amounts for 2018.
The standard deduction is subtracted from your Adjusted Gross Income (AGI), which means it reduces your taxable income. (Note that there is an additional standard deduction for elderly and blind taxpayers, which is $1,300 for tax year 2018. This amount increases to $1,600 if the taxpayer is also unmarried.)
For tax year 2018, the standard deduction amounts are as follows:
Filing Status Standard Deduction
Single $12,000
Married Filing Jointly or Qualifying Widow(er) $24,000
Married Filing Separately $12,000
Head of Household $18,000
The 2018 tax rates are new take effect under the Tax Jobs and Cuts Act of 2017, which was signed into law by President Trump on December 22, 2017. These tax changes are effective as of January 1, 2018. While there are still 7 tax brackets, the rates have decreased overall. (These lower tax rates will expire in 2025, unless Congress votes to extend them.) The top rate is reduced from 39.6% to 37%. The bottom rate is still 10%, but it includes higher income.
Single
Taxable Income Tax Rate
$0 – $9,525 10% of taxable income
$9,526 – $38,700 $952.50 plus 12% of the amount over $9,525
$38,701 – $82,500 $4,453.50 plus 22% of the amount over $38,700
$82,501 – $157,500 $14,089.50 plus 24% of the amount over $82,500
$157,501 – $200,000 $32,089.50 plus 32% of the amount over $157,500
$200,001 – $500,000 $45,689.50 plus 35% of the amount over $200,000
$500,001 or more $150,689.50 plus 37% of the amount over $500,000
Married Filing Jointly or Qualifying Widow(er)
Taxable Income Tax Rate
$0 – $19,050 10% of taxable income
$19,051 – $77,400 $1,905 plus 12% of the amount over $19,050
$77,401 – $165,000 $8,907 plus 22% of the amount over $77,400
$165,001 – $315,000 $28,179 plus 24% of the amount over $165,000
$315,001 – $400,000 $64,179 plus 32% of the amount over $315,000
$400,001 – $600,000 $91,379 plus 35% of the amount over $400,000
$600,001 or more $161,379 plus 37% of the amount over $600,000
Married Filing Separately
Taxable Income Tax Rate
$0 – $9,525 10% of taxable income
$9,526 – $38,700 $952.50 plus 12% of the amount over $9,525
$38,701 – $82,500 $4,453.50 plus 22% of the amount over $38,700
$82,501 – $157,500 $14,089.50 plus 24% of the amount over $82,500
$157,501 – $200,000 $32,089.50 plus 32% of the amount over $157,500
$200,001 – $300,000 $45,689.50 plus 35% of the amount over $200,000
$300,001 or more $80,689.50 plus 37% of the amount over $300,000
Head of Household
Taxable Income Tax Rate
$0 – $13,600 10% of taxable income
$13,601 – $51,800 $1,360 plus 12% of the amount over $13,600
$51,801 – $82,500 $5,944 plus 22% of the amount over $51,800
$82,501 – $157,500 $12,698 plus 24% of the amount over $82,500
$157,501 – $200,000 $30,698 plus 32% of the amount over $157,500
$200,001 – $500,000 $44,298 plus 35% of the amount over $200,000
$500,001 or more $149,298 plus 37% of the amount over $500,000