What's new for 2021 Federal Tax Returns (Part II)

The IRS made several new changes for the 2022 Tax Filing Season. Here are a few to consider when preparing to file your 2021 Tax Return.

Standard Deduction

The standard deduction amounts have been increased to $12,550 for single or married filing separately individuals and to $18,800 for heads of household. Married filing jointly or qualifying widow(er)s can claim $25,100.

Daycare Assistance

For the 2021 tax year, the qualifying expenses for child and dependent care expense increased to $8,000 for one qualifying person and $16,000 for two or more qualifying people. The percentage of qualifying expenses eligible for the credit and the phaseout income threshold have also increased.

Child Tax Credit

The child tax credit has been changed to include qualifying children under the age of 18. The potential credit has also increased to $3,600 for a child under the age of 6 and to $3,000 for children under the age of 18. Additionally, the modified adjusted gross income phaseout threshold is $150,000 for taxpayers filing married filing jointly (or surviving spouse), $112,500 for head of household status, and $75,000 for all others.

Identity Protection PIN

All taxpayers who can properly verify their identity are now eligible. This PIN helps prevent identity theft for the purposes of filing a federal return by using your social security number.