Your Villa Magazine - Moreno Valley - Perris - February-March 2022

TAX COMP • (951) 486-9862 • 23025 Atlantic Circle Suite D, Moreno Valley, CA 92553 | 21 How Tax Brackets Work Based on your income and filing status, you determine that a portion of your income is in the 22% tax bracket. That doesn’t mean you are actually going to pay a 22% rate on your taxable income. It only means that a portion of your income will be taxed at a 22% rate. We currently have seven different tax brackets ranging from 10% - 37%. If someone is single and their taxable income is $40,525, they will pay a 10% rate on the first $9,950 of their income and a 12% tax rate on income that only exceeds $9,950 to $40,525. Income over 0 $9,950 $40,525 $86,375 $164,925 $209,425 $523,600 But not over $ 9,950 $ 40,525 $ 86,375 $164,925 $209,425 $523,600 and over But not over $19,900 $81,050 $172,750 $329,850 $418,850 $628,300 and over Income over 0 $19,900 $81,050 $172,750 $329,850 $418,850 $628,300 Married Filing Jointly or Qualifying Widow Single Filers 2021 Federal Tax Brackets Married Filing Separate But not over $14,200 $54,200 $86,350 $164,900 $209,400 $523,600 and over Income over 0 $14,200 $54,200 $86,350 $164,900 $209,400 $523,600 Head of Household Income over 0 $9,950 $40,525 $86,375 $164,925 $209,425 $314,150 But not over $ 9,950 $ 40,525 $ 86,375 $164,925 $209,425 $314,150 and over Tax Rate 10% 12% 22% 24% 32% 35% 37% Comparison of Education Credits Lifetime Learning Credit: Maximum credit per student $2000 Available for all post-secondary education. Available for one or more courses. Available for an unlimited number of years. American Opportunity Credit: Maximum credit per student $2500; 40% is refundable. Available for four years of college, enrolled at lease half-time for at least one academic period. Cool Parents Pay She is 19 years old and going to college. You are still paying for everything: Tuition, books, insurance, room, and board. Now that she has a part-time job, she wants to file her own tax return in order to get the tax benefit. Before you encourage this bit of independence, first evaluate how the lost deduction and tax credit will affect your tax situation. It may be that it costs more than you expected. Don’t add additional expenses to the college burden. Even though cool parents pay for college...it’s not cool to pass up legitimate tax savings. You May Want to File a Tax Return... (even if you are not required to) There are several reasons why you may want to file a tax return even if you do not meet the minimum income requirements. • If you had taxes withheld from your pay, you may want to file a tax return to receive a tax refund. • If you qualify, you may file a return to receive the refundable Earned Income Tax Credit. • If you have a qualifying child, but owe no tax, you can file to be refunded the Additional Child Tax Credit. • If you have self-employment income in excess of $400. • If you qualify, you must file to claim the Credit for Prior Year Minimum Tax. • If you overpaid estimated tax or applied to a prior year overpayment to this year, you must file to receive the refund. • If you are claiming education credits, you may file a tax return to receive the refundable portion of the American Opportunity Credit. Do I Need to File a Tax Return? Whether or not you are required to file a federal income tax return depends on several things: your filing status, your age,your income, your dependent status, and whether you meet a few other special requirements. Consult the charts below to find out if you are required to file a tax return, then read on to find out why you may want to file a tax return even if you don’t have to. Minimum Income Requirements to File a Federal Income Tax Return MORE FOR 2021! Federal Standard Tax Deduction for 2021 Filing Status Standard Deduction Single $12,550 Head of Household $18,800 Married (Filing Separately) $12,550 Married (Filing Jointly) $25,100 Qualifying Widow(er) $25,100 If you choose not to itemize your deductions on your federal tax return, you can still claim the standard deduction. People age 65 or older, and people who are legally blind receive an additional standard deduction. The standard deduction is calculated by adding the person’s standard deduction (based on their filing status), plus the additional amount. Additional standard deduction amounts for 2021 are: • $1,700 for single or head of household • $1,350 for married filing jointly, married filing separately, or qualifying widow Income Phase Out: Married Jointly: $160,000 - $180,000 All Others: $ 80,000 - $ 90,000 Income Phase Out: (new for 2021) Married Jointly: $160,000 - $180,000 All Others: $ 80,000 - $ 90,000 SUNNYMEAD BLVD. COTTONWOOD AVE. EUCALYPTUS AVE. EUCALYPTUS AVE. DAY ST. FREDERICK ST. OFFICE LOCATION Covid-19 Safe Practices in Place Your well being is our top priority. We provide several options in ways you can have your taxes prepared securely and safely. Please call or go to our website (taxcomp.net )to learn the various methods available. COVID -19 COMPLIANT If you Filing Status is and at the end of 2021 you were... THEN file a return if your gross income was at least...** Single Under 65 65 or older $12,550 $14,250 Married Filing Jointly Under 65 (both spouses) 65 or older (one spouse) 65 or older (both spouses) $25,100 $26,450 $27,800 Married Filing Separately (see the instructions for Form 1040) any age $5 Head of household (see the instructions for Form 1040) under 65 65 or older $18,800 $20,500 Qualifying Widow(er) (see the instructions for Form 1040) under 65 65 or older $25,100 $26,450