Here are 2021 Tax Changes that will benefit you.
Each tax year, there are refundable tax credits that individuals can qualify for if they’ve earned an income (EITC) or have a child (CTC). These credits are normally based on the earned income of an individual, but since 2020 provided less opportunity for income, this policy has changed. As part of the latest coronavirus relief package, policymakers are allowing filers to use their 2019 earned income instead. Our team at Red Rock Tax & Consulting can help you look at both options to see which credit will be the most beneficial for you.
Income brackets and tax rates change each year, and 2020 tax season is no different. The brackets break down like so, 10%, 12%, 22%, 24%, 32%, 35% and 37%. Your bracket depends on your taxable income and filing status. The standard deductions did increase, as the inflation increased in 2020. If your filing status is single, then your standard deduction changed from 2019 at $12,200 to 2020 at $12,400. If filing married and jointly, it changed from 2019 at $24,400 to 2020 at $24,800. Married but filing separately, from 2019 at $12,200 to 2020 at $12,400. And finally, HOH (head of household) from 2019 at $18,350 to 2020 at $18,650.
When in doubt with these tax changes our team here at Red Rock Tax & Consulting can help answer any questions you may have. We’d love to help you get the most out of your 2020 taxes and leave the year behind.
