More In 2021
Forecasting an uptick in inflation has been a losing strategy, but with massive liquidity in markets and fiscal and monetary policy working together, we may see an uptick in consumer prices in 2021. 2 charged in Regina's 1st homicide of 2021, 2 more in custody. CTVNewsRegina.ca Staff. Police said two more suspects have been arrested, and more details should be provided shortly. Dec 22, 2020 While planned construction on new apartments and condos will go forward in 2021, the public's shift in preference to a more suburban setting means you won't see as many builders eager to start planning for more multifamily housing in city centers for a bit – at least not until the future becomes clearer for a post-pandemic housing market. Macy’s To Close 45 More Stores In 2021, Including Two In Florida MIAMI (CBSMiami) — Macy’s is closing 45 more stores in 2021. The company said it expects to shut down several locations as part of its “rightsizing” plans.
You hopefully already know that limits on certain retirement accounts tend to rise each year to account for inflation — and 2021 will be no exception to that, as we recently reported.
But these are not the only limits that the IRS imposes or oversees that tend to increase annually. Limits on certain federal income tax credits also tend to rise each year to account for inflation.
The IRS recently announced that the following credits are among those for which limits will rise for tax year 2021 — the one for which your tax return is due by April 2022.
Saver’s credit
Also known as the retirement savings contributions credit, this tax break is for folks who save money in certain types of retirement accounts — including 401(k) plans and individual retirement accounts (IRAs) — and who are otherwise eligible for the credit.
Income limits: For 2021, you might be eligible for this credit if your adjusted gross income, or AGI (found on your tax return), is not more than:
- Married filing jointly: $66,000 (up from $65,000 for 2020)
- Head of household: $49,500 (up from $48,750)
- All other tax-filing statuses: $33,000 (up from $32,500)
Credit limits:
The maximum amount that the saver’s credit could be worth remains $2,000 for folks whose tax-filing status is married filing jointly and $1,000 for those with any other tax-filing status.
To learn more: Check out “This Overlooked Retirement Tax Credit Gets Better in 2021.”
Earned income credit
This tax credit is for eligible workers. More specifically, it’s for folks with earned income, such as wages, as opposed to income from investments.
Unlike the saver’s credit, the earned income tax credit (EITC) is refundable. That basically means it not only reduces your tax bill, but it also might result in you receiving a tax refund or a receiving a bigger refund than otherwise.
Income limits:For 2021, you might be eligible for the earned income tax credit if your AGI is not more than:
- Married filing jointly: $21,920 to $57,414, depending on whether and how many of your children qualify for the credit (up from $21,710 to $56,844 for 2020)
- All other tax-filing statuses: $15,980 to $51,464, depending on whether and how many of your children qualify for the credit (up from $15,820 to $50,594 for 2020)
Credit limits:
For 2021, the maximum amount that this credit is worth ranges from $543 (if you have no qualifying children) to $6,728 (if you have three or more qualifying children). Those amounts have increased from $538 and $6,660, respectively, for 2020.
To learn more: Visit the “Earned Income Tax Credit” page on the IRS website.
Adoption credit
This tax break is for qualified expenses associated with the legal adoption of a child, such as adoption fees, court costs and legal fees.
Income limits: For 2021, the full value of the adoption credit is available to eligible taxpayers with a modified AGI (found on your tax return) of up to $216,660 (up from $214,520 for 2020). The credit is not available at all to those earning $256,660 or more (up from $254,520 for 2020). Eligible taxpayers with a modified AGI of more than $216,660 but less than $256,660 can take advantage of the adoption credit in part but not in full.
Credit limits: The adoption credit is worth up to $14,440 for 2021 (up from $14,300 for 2020).
To learn more: You can use the IRS’ Interactive Tax Assistant, which is a free online tool, to determine if you are eligible for the adoption credit.
Lifetime learning credit
This education credit is for qualified tuition and related expenses for eligible taxpayers who are enrolled at an eligible education institution.
“This credit can help pay for undergraduate, graduate and professional degree courses — including courses to acquire or improve job skills,” the IRS explains.
More Earthquakes In 2021
Income limits: For 2021, the full value of the lifetime learning credit is available to eligible taxpayers with a modified AGI of up to $59,000, or $119,000 for a joint tax return (the latter of which is up from $118,000 for 2020). The credit is not available at all to those earning more than $69,000, or $139,000 for a joint tax return. Eligible taxpayers with a modified AGI of more than $59,000/$119,000 but not more than $69,000/$139,000 can take advantage of the lifetime learning credit in part but not in full.
Credit limits: The maximum value that the lifetime learning credit could be worth remains $2,000 per tax return.
To learn more: Visit the “Lifetime Learning Credit” page on the IRS website.
Other tax credits
The above credits are among the few federal income tax credits that have limits that tend to change each year, but they are not the only tax credits that Uncle Sam offers.
Other federal tax credits that are currently available include:
- Child tax credit
- Credit for other dependents
- American opportunity tax credit (an education credit)
- Credit for the elderly or disabled
It’s worth taking a moment to see if you might qualify for these or any other tax credits, as they would directly impact your tax bill. As we explain in “3 Key Questions Every Taxpayer Must Answer“:
Read More In 2021
“A tax deduction lowers your taxable income, while a tax credit lowers your tax bill dollar for dollar.”
For example, a $1,000 tax deduction would lower your taxable income by $1,000 — which may or may not lower the amount of money you owe Uncle Sam — while a $1,000 tax credit would take $1,000 off the amount you owe.
2021 By Week
For help determining whether you’re eligible for a given tax credit, check out the IRS’ Interactive Tax Assistant, which is a free online tool.
Sponsored: Earn $40 in less than 30 seconds
Earn extra money by using Rakuten (formerly known as Ebates) — a site that gets you cash back at more than 2,500 stores. As a bonus for joining Rakuten between now and Nov. 30, 2020, you'll earn $40 when you sign up using our link and spend at least $40 shopping online through Rakuten within the first 90 days. Start earning cash back and claim a free $40 bonus today.
Weeks In 2021
Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.