Able to file early? Don't wait
It’s a good idea to file your 2021 tax return as early as you can. This will allow you to receive refunds earlier and avoid processing delays due to the pandemic.
New life expectancy tables will slightly impact the amount needed to withdraw
For the first time in nearly 20 years, the IRS has released updated actuarial or life expectancy tables. For those who take required minimum withdrawals (RMD) from retirement accounts, updated tables will need to be utilized to calculate your annual RMD.
Work from home
If you work full-time for someone else, you won’t be able to take the home office deduction on your federal income taxes. (Source: USNEWS.com, March 9, 2021)
Child Tax Credit
The Child Tax Credit was increased in 2021 to $3600 for children ages five and under and to $3000 for children ages six through seventeen. (Source: IRS.gov. 2021)
How long should I keep my tax records?
- You should keep records for three years from the original filing date of your return or two years from the date you paid your taxes.
- You should keep your records for seven years if you claimed a loss from worthless securities or a bad debt deduction. (Source: IRS.gov. August 5, 2021)
Lastly, some IRA contribution limits increase for 2022
For workplace retirement accounts (i.e. 401(k), 403(b), etc.), the contribution limit rises $1,000 to $20,500. Catch-up contributions for those over age 50 remain at $6,500.
Eligibility for Roth IRA contributions has increased up to $129,000 to $144,000 for single filers and heads of households, and $204,000 to $214,000 for those filing jointly as married couples.
Those with a SIMPLE IRA Plan (SIMPLE is an acronym for Savings Incentive Match Plan for Employees), can increase their contribution from $13,500 to $14,000.
The limit for traditional Individual Retirement Accounts (IRAs) remains at $6,000. The catch-up contribution for traditional IRAs remains $1,000 as well.
If these increases apply to your retirement strategy, you may want to make some adjustments to your contributions. Where I can provide clarity or be of any help, I welcome the opportunity.