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Tax Changes for This Year's Return

If we learn anything from 2020, it’s that our lives can be changed at any moment. We went from working in offices, to working at home. From going to large gatherings, to limiting who we have contact with. With these changes also come the changes to our tax code. Here are some changes to this year's tax filings of which you should be aware.
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Change in tax brackets

Due to extraordinary circumstances, there are slight changes to the existing tax brackets. You may fall into a different bracket this year than you did last year. Here is a breakdown:

Unmarried individuals

2020 2021
10% - up to $9,875 10% - up to $9,950
12% - $9,876 to $40,125 12% - $9,951 to $40,525
22% - $40,126 to $85,525 22% - $40,526 to $86,375
24% - $85,526 to $163,300 24% - $86,376 to $164,925
32% - $163,301 to $207,350 32% - $164,926 to $209,425
35% - $207,351 to $518,400 35% - $209,426 to $523,600
37% - $518,401 or more 37% - $523,601 or more

Married individuals filing joint returns

2020 2021
10% - up to $19,750 10% - up to $19,900
12% - $19,751 to $80,250 12% - $19,901 to $81,050
22% - $80,251 to $171,050 22% - $81,051 to $172,750
24% - $171,051 to $326,600 24% - $172,751 to $329,850
32% - $326,601 to $414,700 32% - $329,851 to $418,850
35% - $414,701 to $622,050 35% - $418,851 to $628,300
37% - $622,051 or more 37% - $628,301 or more

Head of household

2020 2021
10% - up to $14,100 10% - up to $14,200
12% - $14,101 to $53,700 12% - $14,201 to $54,200
22% - $53,701 to $85,500 22% - $54,201 to $86,350
24% - $85,501 to $163,300 24% - $86,351 to $164,900
32% - $163,301 to $207,350 32% - $164,901 to $209,400
35% - $207,351 to $518,400 35% - $209,401 to $523,600
37% - $518,400 or more 37% - $523,601 or more

Change in standard deduction

The standard deduction is the dollar amount people can deduct from their taxable income if they do not choose to itemize their deductions.

Filing Type 2020 2021
Single/married but filing separate $12,400 $12,550
Married filing jointly $24,800 $25,100
Head of household $18,650 $18,800
Change in earned income tax credit

The earned income tax credit is a refundable tax credit for low to moderate income individuals and couples. The benefit amount depends on income and amount of children. This year’s earned income tax credit is $6,728. This is a $100 increase from last year.

Changes in Section 911 - foreign earned income exclusion

The foreign earned income exclusion applies to US citizens who reside or work outside of the United States. This year’s foreign earned income exclusion is $108,700. This is a $1,000 increase from last year.

Changes in the adoption tax credit

The adoption tax credit is offered to adoptive parents in the United States. The maximum amount of this tax credit for this year is $14,440. This is a $360 increase from last year.

The world is forever changing. If you need assistance with filing your tax return this year, contact us. We’re here to help.

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