We keep track of all the tax law changes so you don't have to. TaxAct 2021 federal and state products have all the latest tax law changes to help you get your maximum guaranteed refund the fastest way possible!
President Trump issued an executive order to defer the payment of payroll tax between September 1, 2020 and December 31, 2020. Although Congress may pass further action to waive some or all of these deferred taxes, nothing has been passed. At this time, the payroll tax obligation will remain in full, but the due date for payment of that tax obligation has been pushed back. Businesses can opt out of the deferral.Print
Generally, the amount you received from the Paycheck Protection Program will be excluded from gross income if certain qualifying criteria is met. That exclusion is dependent upon your payment of qualifying expenses, retention of employees, and compensation.Print
The CARES act resets (NOL) carryback to pre-tax reform levels. Net operating losses (NOLs) generated in 2018 through 2020 can offset 100 percent of taxable income for tax years before 2021 and are allowed a 5-year carry-back and indefinite carry-forward.Print
If you pay your employees from 3/12/2020 through 12/31/2020, and did not participate in any COVID-related SBA loan programs, you may be able to claim a refundable tax credit on your 2020 tax return. You must meet one of the following two qualifications:
The maximum amount of earned income on which you pay Social Security tax is now $137,700. When you reach that amount with one employer, they should stop withholding Social Security tax from your pay until the following year. If you work for more than one employer, and your total earnings are more than $137,700, TaxAct calculates a credit for any overpayment of Social Security taxes.Print
You may qualify for a credit equal to up to $14,300 of your adoption expenses. If your employer provides adoption benefits, you may also be able to exclude up to the same amount from your income. Both a credit and exclusion may be claimed for the same adoption, but not for the same expense. The credit is permanent and indexed to inflation.Print
The child tax credit remains $2,000 per qualifying child. Phase out also remains steady at $200,000 ($400,000 if married filing jointly). Qualifying children must have a Social Security Number (SSN). If a child has an ITIN but no SSN you may be able to claim the Other Dependent Credit instead.Print
The Recovery Rebate Credit is designed to reconcile the Economic Impact (stimulus) Payment. Taxpayers who didn’t receive enough in stimulus funds will receive a credit on their 2020 tax return. Taxpayers who may have received more than they qualified for will not need to repay those funds.Print
Thanks to the Coronavirus Aid, Relief, and Economic Security (CARES) Act, taxpayers can deduct charitable donations of up to $300 even if they don’t itemize. Those who do itemize can deduct up to 100% of adjusted gross income, up from 60% previously.Print
Although not as extensive as in 2018 and 2019, Form 1040 has once again been modified.
Form 1040, page one changes:
Form 1040, page two changes:
The standard amount you can deduct from income if you don't itemize your deductions is $12,400 ($24,800 for married couples filing jointly, or $18,650 if you file as head of household).Print
The Alternative Minimum Tax (AMT) exemption amount for individuals rises in 2020 to $72,900 and begins to phase out at $518,400. For married couples filing jointly, the exemption rises to ($113,400, with phase-out beginning at $1,036,800, for married couples filing jointly).Print
If you have no children, your maximum Earned Income Credit for 2020 is $538. With two children, the maximum amount is $5,920, and with one child, it is $3,584. If you have three or more qualifying children, the maximum Credit you can receive for 2020 is $6,660 (up from $6,557 in 2019).Print
You may be able to exclude all or part of the interest from qualifying Series EE or Series I bonds if you use the income for qualified educational expenses. You cannot take this benefit if your modified adjusted gross income is $97,350 or more ($153,500 if you file jointly, or if you file as Qualifying Widow(er) with Dependent Child).Print
The American Opportunity Tax Credit income limits remain unchanged for 2020. You can claim this benefit even if the student doesn't receive Form 1098-T from the education institution. Make sure to have your TIN ready by the time you file - you can't claim the credit without it.Print
The standard mileage rate for the use of your car or other vehicle falls back to 57.5cents per mile for business (down from 58 cents for 2019) and down to 17 cents per mile driven for medical or moving purposes (down from 20 cents for 2019). The rate for charitable travel held steady at 14 cents per mile.Print
The most you can contribute to one of these plans increases to $2,750. Your spouse can also contribute $2,750 if he or she meets the qualifications. For certain FSAs, up to $500 can still be carried over to the next year.Print
(1) Self-only coverage. The term "high deductible health plan" as defined in Sec. 220(c)(2)(A) means, for self-only coverage, a health plan that has an annual deductible that is not less than $1,400 and not more than $3,550, and under which the annual out-of-pocket expenses required to be paid (other than for premiums) for covered benefits do not exceed $6,900.
(2) Family coverage. The term "high deductible health plan" means, for family coverage, a health plan that has an annual deductible that is not less than $2,800 and not more than $7,100, and under which the annual out-of-pocket expenses required to be paid (other than for premiums) for covered benefits do not exceed $13,800.Print