The 2021 tax season is here and now is the time you start planning your taxes. For Texas residents, the filing deadline for your 2020 federal tax return is now Tuesday June 15, 2021. You should plan your taxes in advance to avoid the rush during the last days and prevent potentially costly mistakes. It also remains important to stay updated about any changes to the tax code or tax guidelines, so that you do not attract unwanted attention from the IRS.
A progressive tax bracket means that you pay a set tax rate for a specific range of income. For the tax year 2020, the tax rates are generally the same, but there are some modifications to specific tax brackets. Let’s take a closer look at the income tax brackets for the year 2021.
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Breakdown of Next Year’s Marginal Tax Rates
The IRS updates individual tax brackets to adjust for inflation. Currently, there are seven individual income tax brackets: 10%, 12%, 22%, 24%, 32%, 35%, and 37%. The brackets mentioned above are marginal brackets meaning that different portions of your income will be taxed at different rates.
Single and Married Filers
The taxable income for different tax brackets is different for individual filers and married couples filing jointly. For example, this year’s highest tax bracket of 37% will be applicable to individual taxpayers with an income more than $523,600 and $628,300 for married couples filing jointly. Also, the standard deductions are different for individual filers and married couples filing jointly.
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Standard Deduction Updates
The IRS has allowed an increased standard deduction for the tax year 2020 as an adjustment for inflation. The standard deduction is a flat amount that lowers the amount of your taxable income. This year, the standard deduction for single taxpayers is $12,550 which is $150 more than last year’s figure. The deduction is $25,100 for married couples, reflecting an increase of $300 from last year.
Staying up to date with changes in tax laws will help you file returns and pay your taxes on time. It is recommended that you consult an IRS tax attorney who can guide you properly to avoid any tax issues related to filing. If you are looking for an IRS tax attorney in the Dallas-Fort Worth Metroplex the Law Office of Nick Nemeth is here to help. We have a team of experienced attorneys with a proven track record of helping clients resolve IRS tax problems. To speak to one of our IRS tax attorneys, call (972) 627-4580 or fill out our contact form, and we will take it from there.