Every year, millions of taxpayers have the opportunity to apply what is known as the “standard deduction” to their taxes. This deduction allows many households with specific income thresholds to lower their taxes paid to the IRS. Many people have the opportunity to use this deduction instead of complicated, itemized deductions, but they might not understand how to take advantage of this standard deduction.
It is important for taxpayers to learn some financial basics about standard and itemized deductions – especially with taxes due April 15, 2021. If you need help with itemized deductions or other aspects of your federal personal income tax return, ask about the Roseville tax preparation services offered by Cook CPA Group. We provide trustworthy tax guidance backed by more than 20 years of experience. Call our offices today at (916) 432-2218.
What is the Standard Tax Deduction?
In short, tax deductions are good news for taxpayers. Of course, the full explanation is more complicated. However, to keep it simple, a tax deduction allows you to deduct certain expenses from your taxable income. As a result, you have less taxable income, which means you also have lower tax liabilities – in other words, a smaller tax bill.
There are several different types of tax deductions. However, many taxpayers choose an option called the “standard deduction,” which is a flat amount adjusted annually for inflation by the Internal Revenue Service (IRS). The standard deduction is popular because it is much simpler to use than itemized deductions, which require more calculation.
In contrast to the standard deduction, itemized deductions allow taxpayers to deduct individual expenses in specific categories – for example, property taxes or charitable contributions. While this approach is more complex and challenging, it can equate to considerable savings for some taxpayers. Ask an experienced CPA about tax services for individuals if you need help determining whether the standard deduction or itemized deductions are the better financial option for you.
Changes to the Standard Deduction Under the New Tax Laws
The Tax Cuts and Jobs Act made several dramatic changes to sections of the U.S. Tax Code. One change that could have especially significant financial impacts is the adjustment to the standard deduction.
Like most aspects of your tax return, the standard deduction is affected by your filing status. For example, the 2020 standard deduction was $12,400 for a single filer, $18,650 for heads of households, and $24,800 for a married couple filing jointly. For 2021, the standard deduction is higher for a single filer, heads of households, and a married couple filing jointly. (To get an idea of how much inflation has impacted the standard deduction, just compare those figures to their corresponding amounts in 1970: $1,100 across all three categories.)
Under the new tax plan, the standard deduction will be significantly larger, roughly doubling in size for single filers. Standard deductions under the TCJA are listed below by filing status and include the following:
- Single– $12,400
- Married Filing Jointly– $24,800
- Married Filing Separately – $12,400
- Head of Household– $18,650
Blind and elderly taxpayers may qualify for an additional standard deduction, which is $1,650. As the IRS notes, “These amounts will be adjusted for inflation for taxable years beginning after the end of the year.”
For more information about changes to the standard deduction, taxpayers might be interested in reading Internal Revenue Bulletin 2018-10, available here. However, while IRS publications can help you identify issues to consider in your tax planning strategy, personalized tax guidance is essential for getting the most out of credits and deductions while keeping your tax liabilities to a minimum.
Why You Need an Experienced Tax Accountant for Your Tax Returns in 2021
As you know, filing taxes is a duty every American citizen must meet every year. If you miss filing your taxes, you can face severe problems with the IRS. Filing taxes is never an easy task, but that should not prevent you from doing it. An experienced Roseville and Sacramento, CA tax accountant, can help you with all of these matters. With your attorney’s assistance, you can make sure all of your documents are complete with accurate information. Furthermore, you can save time, money, and unnecessary stress, especially if you are a business owner. Business tax returns are often complicated, and their owners may need assistance from an experienced tax accountant.
If you failed to pay your taxes at any point, it is essential you contact an experienced Roseville and Sacramento tax accountant. The IRS will frown upon filers who don’t meet their tax filing deadlines. Furthermore, the IRS will not go easy on you if you failed to file your taxes. Typically, the IRS will impose penalties, including fines and jail time, depending on the particular circumstances of your case.
Having a skilled, experienced tax accountant by your side means you can make sure you are filing your taxes correctly while avoiding any complications or mistakes that may get you in trouble with the IRS. Any significant life changes you may experience can influence your ability to file your taxes. It is always in your best interest to hire an experienced Roseville and Sacramento tax accountant.
Get Help Filing Your Federal Tax Return from Cook CPA Group
Unless you obtain a deadline extension, you’re almost out of time to file your federal income tax return. If you file your tax return or pay your taxes late, you could receive failure-to-pay or failure-to-file penalties. If there are errors or missing information on your tax return, you could be audited by the IRS or even placed under investigation for suspected tax evasion.
Make sure your taxes are prepared with care, precision, and skill by hiring an experienced tax accountant qualified to handle California and federal tax returns. Our team serves taxpayers in Roseville, Sacramento, and the surrounding area, including business owners and individuals who need cryptocurrency tax help. You can count on tax guidance, contact Cook CPA Group online, or call our Roseville tax firm at (916) 259-8471 today.