IRS announces inflation adjustments for 2021 tax year

Local News

FORT WAYNE, Ind. (WANE) — New changes surrounding inflation on deductions are coming to the 2021 taxpayers according to the Internal Revenue Service (IRS).

“They are not major changes but taxpayers will notice them,” said Linda Troyer, Tax Pro from Jackson Hewitt. “Mostly it’s just updated limitations.”

The standard deduction for married couples filing jointly for the tax year 2021 rises to $25,100, up $300 from the prior year. For single taxpayers and married individuals filing separately, the standard deduction rises to $12,550 for 2021, up $150, and for heads of households, the standard deduction will be $18,800 for the tax year 2021, up $150.

Other changes including an increase in limitations and an increase in the contribution you can make to your retirement accounts.

Even though filing for your 2021 taxes is still months away, Troyer says it is smart to start tracking down your documents now. She recommends you start collecting your documents throughout the year and placing items like check stubs and receipts in a folder.

“Don’t wait until next year when you go to file and you’re asked where is this,” Troyer said. “That’s why some people had to have extension filed because they waited for the very end of the tax season and then realized they didn’t have the documents.”

While people should be preparing for the upcoming 2021 tax season there are still Hoosiers who have yet to file their taxes for 2020.

The IRS is reminding taxpayers the deadline for 2020 tax returns is less than a month away. This deadline is for people who asked for an extension to file their taxes. This is not an extension to pay your 2020 taxes.

While the IRS has not yet released the number of taxpayers who took advantage of the extension, Troyer says she and other tax professionals have seen an increase.

The final day to file your 2020 taxes is Oct. 15

If you still have not received your refund for 2020 or 2019 you are not alone. Troyer says she had a client who filed their 2020 taxes back in March and they have still not received their refund because it’s not been processed yet.

The reason is that the IRS is still behind. When an IRS office has an outbreak of COVID-19, employees can’t work from home due to the sensitivity of the documents.

If you have any questions about your 2019 or 2020 tax return click here.

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