22 THE QUEENS COURIER • QUEENS BUSINESS • MARCH 11, 2021 FOR BREAKING NEWS VISIT WWW.QNS.COM
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6 Key Tax Q&As for 2021
Right now, you may be more concerned about your
2020 tax bill than you are about how to handle your
personal finances in the new year. However, as you
deal with your annual tax filing, it’s a good idea to
also familiarize yourself with pertinent amounts
that may have changed for 2021.
Not all tax figures are adjusted for inflation and,
even if they are, they may be unchanged or change only slightly each year
because of low inflation. In addition, some tax amounts can only change
with new tax legislation. Here are six commonly asked (and answered) Q&As
about 2021 tax-related figures:
1. How much can I contribute to an IRA for 2021? If you’re eligible, you
can contribute $6,000 a year into a traditional or Roth IRA, up to 100% of
your earned income. If you’re age 50 or older, you can make another $1,000
“catch up” contribution. (These amounts are the same as they were for 2020.)
2. I have a 401(k) plan through my job. How much can I contribute to
it? For 2021, you can contribute up to $19,500 to a 401(k) or 403(b) plan.
You can make an additional $6,500 catch-up contribution if you’re age 50
or older. (These amounts are also the same as they were for 2020.)
3. I sometimes hire a babysitter and a cleaning person. Do I have to
withhold and pay FICA tax on the amounts I pay them? In 2021, the
threshold for when a domestic employer must withhold and pay FICA for
babysitters, house cleaners and other domestic employees is increasing to
$2,300 from $2,200 for 2020.
4. How much do I have to earn in 2021 before I can stop paying Social
Security tax on my salary? The Social Security tax wage base is $142,800
for 2021, up from $137,700 for 2020. That means that you don’t owe Social
Round
Service
Security tax on amounts earned above that. (You must pay Medicare tax on
all amounts that you earn.)
5. What’s the standard deduction for 2021? The Tax Cuts and Jobs Act
eliminated the tax benefit of itemizing deductions for many people by
significantly increasing the standard deduction and reducing or eliminating
various itemized deductions. For 2021, the standard deduction amount is
$25,100 for married couples filing jointly (up from $24,800 for 2020). For
single filers, the amount is $12,550 (up from $12,400) and, for heads of
households, it’s $18,800 (up from $18,650).
So, if the amount of your itemized deductions (such as charitable gifts and
mortgage interest) are less than the applicable standard deduction amount,
you won’t benefit from itemizing for 2021.
6. How much can I give to one person without triggering a gift tax return
in 2021? The gift tax annual exclusion for 2021 is $15,000, unchanged from
last year. This amount is only adjusted in $1,000 increments, so it typically
increases only every few years.
These are only some of the tax figures that may apply to you. For more
information about your tax picture, or if you have questions, don’t hesitate
to contact us.
COMPLETE PERSONAL & BUSINESS TAX SERVICE
• Over 25 years experience
• Reasonable rates
• FREE E-FILE with paid tax return
• Being Audited?
• Unfiled Tax Returns?
• Wage & Bank Levies?
• Owe the IRS more
than $10,000?
Salvatore P. Candela, EA, ATA, ABA
Enrolled Agent - Tax Advisor
scandela@thetaxadvocategroup.com
www.thetaxadvocategroup.com
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