2021 inflation adjustments and tax tables issued

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2021 inflation adjustments and tax tables issued

The IRS on Monday issued the 2021 annual inflation adjustments for many tax provisions, as well as the 2021 tax rate tables for individuals and estates and trusts (Rev. Proc. 2020-45). These adjusted amounts will be used to prepare tax year 2021 returns in 2022.

Many amounts will increase for inflation in 2021. The standard deduction will increase to $25,100 for married individuals filing joint returns or surviving spouses, $18,800 for heads of household, and $12,550 for unmarried individuals (other than surviving spouses) and married individuals filing separate returns.

The maximum amount of the earned income tax credit (for taxpayers with three or more children) will increase to $6,728, up from $6,660 for 2020.

The maximum amount of the adoption credit will increase to $14,440, up from $14,300 for 2020. That is also the maximum amount that will be excludable from an employee’s gross income for qualified amounts paid or expenses incurred by an employer under an adoption-assistance program.

The 2021 exemption amounts for the alternative minimum tax will be $114,600 for married individuals filing joint returns and surviving spouses, $73,600 for unmarried individuals (other than surviving spouses), $57,300 for married individuals filing separate returns, and $25,700 for estates and trusts, all increased from 2020.

The Sec. 179 amount for tax years beginning in 2021 will be $1,050,000 with a phaseout threshold of $2,620,000, slight increases from 2020.

The qualified business income threshold under Sec. 199A(e)(2) will increase to $329,800 for married individuals filing joint returns and to $164,925 for married individuals filing separate returns, and to $164,900 for single individuals and heads of household, all increased from 2020.

The Sec. 911 foreign earned income exclusion amount will increase to $108,700, up from $107,600 in 2020.

The basic exclusion amount for determining the unified credit against the estate tax will be $11,700,000, up from $11,580,000, for decedents dying in calendar year 2021. The annual gift tax exclusion amount remains $15,000.

Sally P. Schreiber, J.D., (Sally.Schreiber@aicpa-cima.com) is a JofA senior editor.

Research & References of 2021 inflation adjustments and tax tables issued|A&C Accounting And Tax Services
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