Given that the world has taken a massive hit from the coronavirus, a lot has changed for the 2021 tax season. As always, it remains important to keep abreast with any changes to the tax code or filing guidelines so as not to fall aowl of the IRS. The tax day this year is Tuesday June 15, 2021, and it is recommended that you file your 2020 tax return by then. An IRS tax attorney can help you with all your filing requirements including things such as IRS installment agreement. Let’s have a look at everything you need to know about the 2021 taxe season.
Income Brackets and Rates for 2021 Tax Season
The percentage of your income that you pay in taxes depends on the tax bracket in which your income falls. For example, if your annual income is $75,000, you fall in the 22% tax bracket. But this does not imply that you have to pay a flat 22% tax on your annual income. A part of your income will be taxed at 10%, another part will be taxed at 12%, and the last part will be at 22%. For the year 2020, the tax rates are kept the same but there have been some adjustments in the tax brackets by a few hundred dollars.
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Deductions and Credits to Consider
At the time of paying taxes, you have the option of selecting the standard deduction or itemizing your deductions. For the tax year 2020, the standard deductions was increased to adjust for inflation. When deciding whether you should take the standard deduction or consider itemizing, you need to remember that it all boils down to your situation and every situation is different. An IRS attorney can help you with your decision.
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Apart from the standard deduction, there are other deductions and credits that can help you lower your tax burden. The deductions you claim may include charitable deductions, medical deductions, and business deductions. Tax credits, on the other hand, are meant to lower your actual tax amount. There are two types of credits: refundable and non-refundable. If the credit exceeds the amount you owe as tax, then it is a refundable credit and the difference is paid to you as a refund. The tax credits you may take advantage of also include earned income tax credit and child tax credit.
Wrap Up
The economy has taken a hit from the pandemic and a lot of people may not be able to pay their tax dues on time. If you fall in that category, it is recommended that you immediately contact our team of IRS tax attorneys at the Law Offices of Nick Nemeth. Our attorneys can help you find the most ideal solution to your tax issues, including exploring avenues such as applying for an offer in compromise and other IRS installment agreements. To speak to one of our expert IRS tax attorneys, call the Law Offices of Nick Nemeth at (972) 426-2553 or fill out our contact form.
