The important "trigger" income levels 2021

[Gumby]

Due to the December Consolidated Appropriations Act (famous for the additional EIP2 of $600 per person), the phaseouts for the Lifetime Learning Credit are now the same as for the AOTC....

OP needs to be updated.

Done

 

[Niuatoputapu]

Gumby, thank you for the posting.

 

[caramel]

Late to this, but wanted to thank you for this post, Gumby.

 

[calwatch]

The income limits to traditional and Roth IRA contributions are based on MAGI not taxable income. This should be corrected.

 

[Gumby]

The income limits to traditional and Roth IRA contributions are based on MAGI not taxable income. This should be corrected.

Good catch. I have made the change. Thanks.

 

[GTFan]

ACA cliff has been removed for two years, now the subsidy is based on 8.5% of income after 400% FPL.

 

[Gumby]

ACA cliff has been removed for two years, now the subsidy is based on 8.5% of income after 400% FPL.

I'll try to fit that in there in an understandable way.

Edit to add: Done

 

[mistermike40]

Thanks for compiling/posting this.

 

[aaronc879]

Could someone clarify this for me. It says $66,001+ I can not make deductible contributions to IRA. Is that total gross income or after the standard deduction meaning I could make up to around $78,500 and still contribute. What if I put $19,500 into a 401K taking my gross income down to those numbers does that count or is it before those contributions are taken out. I'm confused.

 

[ArmchairMillionaire23]

Could someone clarify this for me. It says $66,001+ I can not make deductible contributions to IRA. Is that total gross income or after the standard deduction meaning I could make up to around $78,500 and still contribute. What if I put $19,500 into a 401K taking my gross income down to those numbers does that count or is it before those contributions are taken out. I'm confused.

Per the IRS website:

If Your Filing Status Is... single or
head of household

And Your Modified AGI Is... $66,000 or less:
Then You Can Take...

a full deduction up to the amount of your contribution limit.

If Your Modified AGI Is...
more than $66,000 but less than $76,000:
Then You Can Take...

a partial deduction.

And if Your Modified AGI Is...

$76,000 or more:

no deduction.

Don't worry, pretty much everything involving the IRS needs some type of clarification.

 

[teej1985]

There are different MAGI's for different code sections. You need to use the MAGI for IRA contributions.

Here's what one website says - https://www.thebalance.com/how-to-calculate-your-modified-adjusted-gross-income-4047216 - you use for the calculation:


Start with your adjusted gross income from your 1040. Then find yourself a calculator and add back:

Any deductions you took for IRA contributions
Any deductions you took for student loan interest or tuition
Half of your self-employment tax
Passive income or loss
Excluded foreign income
Rental losses
Interest from EE savings bonds used to pay higher education expenses
Employer-paid adoption expenses
Losses from a publicly traded partnership


The standard or itemized deductions are what reduces an AGI to Taxable income, so Schedule A or the standard deduction are not relevant.

 

[teej1985]

Could someone clarify this for me. It says $66,001+ I can not make deductible contributions to IRA. Is that total gross income or after the standard deduction meaning I could make up to around $78,500 and still contribute. What if I put $19,500 into a 401K taking my gross income down to those numbers does that count or is it before those contributions are taken out. I'm confused.

Your 401(k) reduces your wages and creates a lower taxable wage on your tax return. So if your gross income is $78,500 and you put $19,500 in a traditional 401(k), you would have $59,000 taxable wages on your tax return. Any health insurance premiums taken out of your pay check would also likely decrease your taxable wages.

 

[aaronc879]

What about AMT? That one is a bit confusing. How much can a single person make before hitting AMT? I never paid much attention to it before because I was never near that high of income but I may be next year.

 

[ArmchairMillionaire23]

What about AMT? That one is a bit confusing. How much can a single person make before hitting AMT? I never paid much attention to it before because I was never near that high of income but I may be next year.

From the IRS document https://www.irs.gov/pub/irs-pdf/f6251.pdf :
This should clear things up for you... (lines 5 through 40)

Enter the amount from Form 1040 or 1040-SR, line 15, if more than zero. If Form 1040 or 1040-SR, line 15,
is zero, subtract lines 12 and 13 of Form 1040 or 1040-SR from line 11 of Form 1040 or 1040-SR and enter
the result here. (If less than zero, enter as a negative amount.) . . . . . . . . . . . . . . 1
2a If filing Schedule A (Form 1040), enter the taxes from Schedule A, line 7; otherwise, enter the amount from
Form 1040 or 1040-SR, line 12 . . . . . . . . . . . . . . . . . . . . . . . . 2a
b Tax refund from Schedule 1 (Form 1040), line 1 or line 8 . . . . . . . . . . . . . . . . 2b ( )
c Investment interest expense (difference between regular tax and AMT) . . . . . . . . . . . . 2c
d Depletion (difference between regular tax and AMT) . . . . . . . . . . . . . . . . . . 2d
e Net operating loss deduction from Schedule 1 (Form 1040), line 8. Enter as a positive amount . . . . . 2e
f Alternative tax net operating loss deduction . . . . . . . . . . . . . . . . . . . . 2f ( )
g Interest from specified private activity bonds exempt from the regular tax . . . . . . . . . . . 2g
h Qualified small business stock, see instructions . . . . . . . . . . . . . . . . . . . 2h
i Exercise of incentive stock options (excess of AMT income over regular tax income) . . . . . . . . 2i
j Estates and trusts (amount from Schedule K-1 (Form 1041), box 12, code A) . . . . . . . . . . 2j
k Disposition of property (difference between AMT and regular tax gain or loss) . . . . . . . . . . 2k
l Depreciation on assets placed in service after 1986 (difference between regular tax and AMT) . . . . . 2l
m Passive activities (difference between AMT and regular tax income or loss) . . . . . . . . . . 2m
n Loss limitations (difference between AMT and regular tax income or loss) . . . . . . . . . . . 2n
o Circulation costs (difference between regular tax and AMT). . . . . . . . . . . . . . . . 2o
p Long-term contracts (difference between AMT and regular tax income) . . . . . . . . . . . . 2p
q Mining costs (difference between regular tax and AMT) . . . . . . . . . . . . . . . . . 2q
r Research and experimental costs (difference between regular tax and AMT) . . . . . . . . . . 2r
s Income from certain installment sales before January 1, 1987 . . . . . . . . . . . . . . . 2s ( )
t Intangible drilling costs preference . . . . . . . . . . . . . . . . . . . . . . . 2t
3 Other adjustments, including income-based related adjustments . . . . . . . . . . . . . . 3
4 Alternative minimum taxable income. Combine lines 1 through 3. (If married filing separately and line 4 is
more than $745,200, see instructions.) . . . . . . . . . . . . . . . . . . . . . .
5 Exemption.
IF your filing status is . . . . . . . . . AND line 4 is not over . . . THEN enter on line 5 . . .
Single or head of household . . . . . . . . . . . $ 518,400 . . . . . $ 72,900
Married filing jointly or qualifying widow(er) 1,036,800 . . . . . 113,400
Married filing separately . . . . . . . . . . . . . . 518,400 . . . . . 56,700
If line 4 is over the amount shown above for your filing status, see instructions.
} . . 5
6 Subtract line 5 from line 4. If more than zero, go to line 7. If zero or less, enter -0- here and on lines 7, 9, and
11, and go to line 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
7 • If you are filing Form 2555, see instructions for the amount to enter.
• If you reported capital gain distributions directly on Form 1040 or 1040-SR, line 7; you reported
qualified dividends on Form 1040 or 1040-SR, line 3a; or you had a gain on both lines 15 and
16 of Schedule D (Form 1040) (as refigured for the AMT, if necessary), complete Part III on the
back and enter the amount from line 40 here.
• All others: If line 6 is $197,900 or less ($98,950 or less if married filing separately), multiply line
6 by 26% (0.26). Otherwise, multiply line 6 by 28% (0.28) and subtract $3,958 ($1,979 if
married filing separately) from the result.
} . . 7
8 Alternative minimum tax foreign tax credit (see instructions) . . . . . . . . . . . . . . . 8
9 Tentative minimum tax. Subtract line 8 from line 7 . . . . . . . . . . . . . . . . . . 9
10 Add Form 1040 or 1040-SR, line 16 (minus any tax from Form 4972), and Schedule 2 (Form 1040), line 2.
Subtract from the result any foreign tax credit from Schedule 3 (Form 1040), line 1. If you used Schedule J
to figure your tax on Form 1040 or 1040-SR, line 16, refigure that tax without using Schedule J before
completing this line (see instructions) . . . . . . . . . . . . . . . . . . . . . . 10
11 AMT. Subtract line 10 from line 9. If zero or less, enter -0-. Enter here and on Schedule 2 (Form 1040), line 1
12 Enter the amount from Form 6251, line 6. If you are filing Form 2555, enter the amount from line 3 of the
worksheet in the instructions for line 7 . . . . . . . . . . . . . . . . . . . . . . 12
13 Enter the amount from line 4 of the Qualified Dividends and Capital Gain Tax Worksheet in the Instructions
for Forms 1040 and 1040-SR or the amount from line 13 of the Schedule D Tax Worksheet in the
Instructions for Schedule D (Form 1040), whichever applies (as refigured for the AMT, if necessary) (see
instructions). If you are filing Form 2555, see instructions for the amount to enter . . . . . . . . . 13
14 Enter the amount from Schedule D (Form 1040), line 19 (as refigured for the AMT, if necessary) (see
instructions). If you are filing Form 2555, see instructions for the amount to enter . . . . . . . . . 14
15 If you did not complete a Schedule D Tax Worksheet for the regular tax or the AMT, enter the amount from
line 13. Otherwise, add lines 13 and 14, and enter the smaller of that result or the amount from line 10 of
the Schedule D Tax Worksheet (as refigured for the AMT, if necessary). If you are filing Form 2555, see
instructions for the amount to enter . . . . . . . . . . . . . . . . . . . . . . . 15
16 Enter the smaller of line 12 or line 15 . . . . . . . . . . . . . . . . . . . . . . 16
17 Subtract line 16 from line 12 . . . . . . . . . . . . . . . . . . . . . . . . . 17
18 If line 17 is $197,900 or less ($98,950 or less if married filing separately), multiply line 17 by 26% (0.26). Otherwise,
multiply line 17 by 28% (0.28) and subtract $3,958 ($1,979 if married filing separately) from the result . . . ▶ 18
19 Enter:
• $80,000 if married filing jointly or qualifying widow(er),
• $40,000 if single or married filing separately, or
• $53,600 if head of household.
} . . 19
20 Enter the amount from line 5 of the Qualified Dividends and Capital Gain Tax Worksheet or the amount from
line 14 of the Schedule D Tax Worksheet, whichever applies (as figured for the regular tax). If you did not
complete either worksheet for the regular tax, enter the amount from Form 1040 or 1040-SR, line 15; if zero
or less, enter -0-. If you are filing Form 2555, see instructions for the amount to enter . . . . . . . 20
21 Subtract line 20 from line 19. If zero or less, enter -0- . . . . . . . . . . . . . . . . . 21
22 Enter the smaller of line 12 or line 13 . . . . . . . . . . . . . . . . . . . . . . 22
23 Enter the smaller of line 21 or line 22. This amount is taxed at 0% . . . . . . . . . . . . . 23
24 Subtract line 23 from line 22 . . . . . . . . . . . . . . . . . . . . . . . . . 24
25 Enter:
• $441,450 if single
• $248,300 if married filing separately
• $496,600 if married filing jointly or qualifying widow(er)
• $469,050 if head of household
} . . 25
26 Enter the amount from line 21 . . . . . . . . . . . . . . . . . . . . . . . . . 26
27 Enter the amount from line 5 of the Qualified Dividends and Capital Gain Tax Worksheet or the amount from
line 21 of the Schedule D Tax Worksheet, whichever applies (as figured for the regular tax). If you did not
complete either worksheet for the regular tax, enter the amount from Form 1040 or 1040-SR, line 15; if zero
or less, enter -0-. If you are filing Form 2555, see instructions for the amount to enter . . . . . . . 27
28 Add line 26 and line 27 . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
29 Subtract line 28 from line 25. If zero or less, enter -0- . . . . . . . . . . . . . . . . . 29
30 Enter the smaller of line 24 or line 29 . . . . . . . . . . . . . . . . . . . . . . 30
31 Multiply line 30 by 15% (0.15) . . . . . . . . . . . . . . . . . . . . . . . . ▶ 31
32 Add lines 23 and 30 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
If lines 32 and 12 are the same, skip lines 33 through 37 and go to line 38. Otherwise, go to line 33.
33 Subtract line 32 from line 22 . . . . . . . . . . . . . . . . . . . . . . . . . 33
34 Multiply line 33 by 20% (0.20) . . . . . . . . . . . . . . . . . . . . . . . ▶ 34
If line 14 is zero or blank, skip lines 35 through 37 and go to line 38. Otherwise, go to line 35.
35 Add lines 17, 32, and 33 . . . . . . . . . . . . . . . . . . . . . . . . . . 35
36 Subtract line 35 from line 12 . . . . . . . . . . . . . . . . . . . . . . . . 36
37 Multiply line 36 by 25% (0.25) . . . . . . . . . . . . . . . . . . . . . . . ▶ 37
38 Add lines 18, 31, 34, and 37 . . . . . . . . . . . . . . . . . . . . . . . . . 38
39 If line 12 is $197,900 or less ($98,950 or less if married filing separately), multiply line 12 by 26% (0.26).
Otherwise, multiply line 12 by 28% (0.28) and subtract $3,958 ($1,979 if married filing separately) from the result 39
40 Enter the smaller of line 38 or line 39 here and on line 7. If you are filing Form 2555, do not enter this
amount on line 7. Instead, enter it on line 4 of the worksheet in the instructions for line 7 . . . . . .

Good luck!

 

[Gumby]

And now you know why there is not an entry in my list. AMT is highly variable depending on your individual circumstances. The only thing that is standard is the Line 5 exemption.

 

[Done]

Under the American Rescue Plan Act, $75k-80k Single and $150k-160k MFJ are the AGI phase-out ranges for stimulus tax credit of $1400/$2800 if you haven’t already received.

 

[USGrant1962]

You might want to add the QBI phase-out levels. I think for 2021 it is taxable income between $329,800 and $429,800(*) for FMJ; and $164,900 and $214,900(*) for single.

*I only found a reference for the 2021 starting limits, and extrapolated the top limit from last year's band.

 

[Koolau]

From the IRS document https://www.irs.gov/pub/irs-pdf/f6251.pdf :
This should clear things up for you... (lines 5 through 40)

Enter the amount from Form 1040 or 1040-SR, line 15, if more than zero. If Form 1040 or 1040-SR, line 15,
is zero, subtract lines 12 and 13 of Form 1040 or 1040-SR from line 11 of Form 1040 or 1040-SR and enter
the result here. (If less than zero, enter as a negative amount.) . . . . . . . . . . . . . . 1
2a If filing Schedule A (Form 1040), enter the taxes from Schedule A, line 7; otherwise, enter the amount from
Form 1040 or 1040-SR, line 12 . . . . . . . . . . . . . . . . . . . . . . . . 2a
b Tax refund from Schedule 1 (Form 1040), line 1 or line 8 . . . . . . . . . . . . . . . . 2b ( )
c Investment interest expense (difference between regular tax and AMT) . . . . . . . . . . . . 2c
d Depletion (difference between regular tax and AMT) . . . . . . . . . . . . . . . . . . 2d
e Net operating loss deduction from Schedule 1 (Form 1040), line 8. Enter as a positive amount . . . . . 2e
f Alternative tax net operating loss deduction . . . . . . . . . . . . . . . . . . . . 2f ( )
g Interest from specified private activity bonds exempt from the regular tax . . . . . . . . . . . 2g
h Qualified small business stock, see instructions . . . . . . . . . . . . . . . . . . . 2h
i Exercise of incentive stock options (excess of AMT income over regular tax income) . . . . . . . . 2i
j Estates and trusts (amount from Schedule K-1 (Form 1041), box 12, code A) . . . . . . . . . . 2j
k Disposition of property (difference between AMT and regular tax gain or loss) . . . . . . . . . . 2k
l Depreciation on assets placed in service after 1986 (difference between regular tax and AMT) . . . . . 2l
m Passive activities (difference between AMT and regular tax income or loss) . . . . . . . . . . 2m
n Loss limitations (difference between AMT and regular tax income or loss) . . . . . . . . . . . 2n
o Circulation costs (difference between regular tax and AMT). . . . . . . . . . . . . . . . 2o
p Long-term contracts (difference between AMT and regular tax income) . . . . . . . . . . . . 2p
q Mining costs (difference between regular tax and AMT) . . . . . . . . . . . . . . . . . 2q
r Research and experimental costs (difference between regular tax and AMT) . . . . . . . . . . 2r
s Income from certain installment sales before January 1, 1987 . . . . . . . . . . . . . . . 2s ( )
t Intangible drilling costs preference . . . . . . . . . . . . . . . . . . . . . . . 2t
3 Other adjustments, including income-based related adjustments . . . . . . . . . . . . . . 3
4 Alternative minimum taxable income. Combine lines 1 through 3. (If married filing separately and line 4 is
more than $745,200, see instructions.) . . . . . . . . . . . . . . . . . . . . . .
5 Exemption.
IF your filing status is . . . . . . . . . AND line 4 is not over . . . THEN enter on line 5 . . .
Single or head of household . . . . . . . . . . . $ 518,400 . . . . . $ 72,900
Married filing jointly or qualifying widow(er) 1,036,800 . . . . . 113,400
Married filing separately . . . . . . . . . . . . . . 518,400 . . . . . 56,700
If line 4 is over the amount shown above for your filing status, see instructions.
} . . 5
6 Subtract line 5 from line 4. If more than zero, go to line 7. If zero or less, enter -0- here and on lines 7, 9, and
11, and go to line 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
7 • If you are filing Form 2555, see instructions for the amount to enter.
• If you reported capital gain distributions directly on Form 1040 or 1040-SR, line 7; you reported
qualified dividends on Form 1040 or 1040-SR, line 3a; or you had a gain on both lines 15 and
16 of Schedule D (Form 1040) (as refigured for the AMT, if necessary), complete Part III on the
back and enter the amount from line 40 here.
• All others: If line 6 is $197,900 or less ($98,950 or less if married filing separately), multiply line
6 by 26% (0.26). Otherwise, multiply line 6 by 28% (0.28) and subtract $3,958 ($1,979 if
married filing separately) from the result.
} . . 7
8 Alternative minimum tax foreign tax credit (see instructions) . . . . . . . . . . . . . . . 8
9 Tentative minimum tax. Subtract line 8 from line 7 . . . . . . . . . . . . . . . . . . 9
10 Add Form 1040 or 1040-SR, line 16 (minus any tax from Form 4972), and Schedule 2 (Form 1040), line 2.
Subtract from the result any foreign tax credit from Schedule 3 (Form 1040), line 1. If you used Schedule J
to figure your tax on Form 1040 or 1040-SR, line 16, refigure that tax without using Schedule J before
completing this line (see instructions) . . . . . . . . . . . . . . . . . . . . . . 10
11 AMT. Subtract line 10 from line 9. If zero or less, enter -0-. Enter here and on Schedule 2 (Form 1040), line 1
12 Enter the amount from Form 6251, line 6. If you are filing Form 2555, enter the amount from line 3 of the
worksheet in the instructions for line 7 . . . . . . . . . . . . . . . . . . . . . . 12
13 Enter the amount from line 4 of the Qualified Dividends and Capital Gain Tax Worksheet in the Instructions
for Forms 1040 and 1040-SR or the amount from line 13 of the Schedule D Tax Worksheet in the
Instructions for Schedule D (Form 1040), whichever applies (as refigured for the AMT, if necessary) (see
instructions). If you are filing Form 2555, see instructions for the amount to enter . . . . . . . . . 13
14 Enter the amount from Schedule D (Form 1040), line 19 (as refigured for the AMT, if necessary) (see
instructions). If you are filing Form 2555, see instructions for the amount to enter . . . . . . . . . 14
15 If you did not complete a Schedule D Tax Worksheet for the regular tax or the AMT, enter the amount from
line 13. Otherwise, add lines 13 and 14, and enter the smaller of that result or the amount from line 10 of
the Schedule D Tax Worksheet (as refigured for the AMT, if necessary). If you are filing Form 2555, see
instructions for the amount to enter . . . . . . . . . . . . . . . . . . . . . . . 15
16 Enter the smaller of line 12 or line 15 . . . . . . . . . . . . . . . . . . . . . . 16
17 Subtract line 16 from line 12 . . . . . . . . . . . . . . . . . . . . . . . . . 17
18 If line 17 is $197,900 or less ($98,950 or less if married filing separately), multiply line 17 by 26% (0.26). Otherwise,
multiply line 17 by 28% (0.28) and subtract $3,958 ($1,979 if married filing separately) from the result . . . ▶ 18
19 Enter:
• $80,000 if married filing jointly or qualifying widow(er),
• $40,000 if single or married filing separately, or
• $53,600 if head of household.
} . . 19
20 Enter the amount from line 5 of the Qualified Dividends and Capital Gain Tax Worksheet or the amount from
line 14 of the Schedule D Tax Worksheet, whichever applies (as figured for the regular tax). If you did not
complete either worksheet for the regular tax, enter the amount from Form 1040 or 1040-SR, line 15; if zero
or less, enter -0-. If you are filing Form 2555, see instructions for the amount to enter . . . . . . . 20
21 Subtract line 20 from line 19. If zero or less, enter -0- . . . . . . . . . . . . . . . . . 21
22 Enter the smaller of line 12 or line 13 . . . . . . . . . . . . . . . . . . . . . . 22
23 Enter the smaller of line 21 or line 22. This amount is taxed at 0% . . . . . . . . . . . . . 23
24 Subtract line 23 from line 22 . . . . . . . . . . . . . . . . . . . . . . . . . 24
25 Enter:
• $441,450 if single
• $248,300 if married filing separately
• $496,600 if married filing jointly or qualifying widow(er)
• $469,050 if head of household
} . . 25
26 Enter the amount from line 21 . . . . . . . . . . . . . . . . . . . . . . . . . 26
27 Enter the amount from line 5 of the Qualified Dividends and Capital Gain Tax Worksheet or the amount from
line 21 of the Schedule D Tax Worksheet, whichever applies (as figured for the regular tax). If you did not
complete either worksheet for the regular tax, enter the amount from Form 1040 or 1040-SR, line 15; if zero
or less, enter -0-. If you are filing Form 2555, see instructions for the amount to enter . . . . . . . 27
28 Add line 26 and line 27 . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
29 Subtract line 28 from line 25. If zero or less, enter -0- . . . . . . . . . . . . . . . . . 29
30 Enter the smaller of line 24 or line 29 . . . . . . . . . . . . . . . . . . . . . . 30
31 Multiply line 30 by 15% (0.15) . . . . . . . . . . . . . . . . . . . . . . . . ▶ 31
32 Add lines 23 and 30 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
If lines 32 and 12 are the same, skip lines 33 through 37 and go to line 38. Otherwise, go to line 33.
33 Subtract line 32 from line 22 . . . . . . . . . . . . . . . . . . . . . . . . . 33
34 Multiply line 33 by 20% (0.20) . . . . . . . . . . . . . . . . . . . . . . . ▶ 34
If line 14 is zero or blank, skip lines 35 through 37 and go to line 38. Otherwise, go to line 35.
35 Add lines 17, 32, and 33 . . . . . . . . . . . . . . . . . . . . . . . . . . 35
36 Subtract line 35 from line 12 . . . . . . . . . . . . . . . . . . . . . . . . 36
37 Multiply line 36 by 25% (0.25) . . . . . . . . . . . . . . . . . . . . . . . ▶ 37
38 Add lines 18, 31, 34, and 37 . . . . . . . . . . . . . . . . . . . . . . . . . 38
39 If line 12 is $197,900 or less ($98,950 or less if married filing separately), multiply line 12 by 26% (0.26).
Otherwise, multiply line 12 by 28% (0.28) and subtract $3,958 ($1,979 if married filing separately) from the result 39
40 Enter the smaller of line 38 or line 39 here and on line 7. If you are filing Form 2555, do not enter this
amount on line 7. Instead, enter it on line 4 of the worksheet in the instructions for line 7 . . . . . .

Good luck!

Remember back when they were talking about simplifying the tax code - perhaps being able to file our taxes on a post card? This, of course, led to jokes (surprise, surprise). Tax Post Card: (1) How much did you make? (2) Send it in. (3) Sign here.

The drones-eye-view of the tax code looks like a mound of bandages covering bandages, covering... That's why I always pay to have my taxes done (hopefully) professionally. YMMV

 

[teej1985]

Should the Additional Medicare Tax be added?

https://www.irs.gov/newsroom/what-is-the-additional-medicare-tax

 

[Gumby]

Should the Additional Medicare Tax be added?

https://www.irs.gov/newsroom/what-is-the-additional-medicare-tax

It is only paid on wages above the limit, not AGI, and there is nothing you can do to avoid it, so it's likely to be of little use to this group.

 

[Travelfreek]

Thanks so much for keeping this updated!! So handy for managing our end of the year actions to stay within certain brackets, whether tax brackets or IRMAA! Is there a way to remind folks they can reduce the AGI for 2021 tax year by $600 for above the line charitable contributions special for this year?

 

[Gumby]

Thanks so much for keeping this updated!! So handy for managing our end of the year actions to stay within certain brackets, whether tax brackets or IRMAA! Is there a way to remind folks they can reduce the AGI for 2021 tax year by $600 for above the line charitable contributions special for this year?

You just have. Thanks!

 

[Done]

The important "trigger" income levels 2021

Is there a way to remind folks they can reduce the AGI for 2021 tax year by $600 for above the line charitable contributions special for this year?

According to the draft 1040 form, this extra deduction will be available to those taking the standard deduction, but unlike last year it will be below the line (deducted after AGI).

 

[Travelfreek]

Oh, shucks! So it doesn’t reduce AGI! Bummer! Oh well! As long as we know before end of year!

 

[SecondCor521]

Copied from the 2022 thread just in case it affects anyone for 2021 tax year. Thank you SecondCor521 for raising the issue. -- Gumby

The third EIP payment (the $1400 one), while received in 2021, was based on 2020 income, so the income thresholds are in my year 2020 post (which was actually posted in December 2019). My intention has been to put all the limits in the post for the income year to which they apply, not the subsequent year when you file the taxes. So the limits in this most recent post are for income received in 2022. I wanted to be forward looking so that people can plan for the year ahead.

I get what you're saying in general, and I agree with the approach of putting things into the proper tax year. But I have a quibble:

The EIP3, while advanced to people based on their 2020 (or in some cases their 2019) tax return, was actually an advance credit applicable to tax year 2021. See ARP Act Section 9601 (page 136 at https://www.congress.gov/117/plaws/publ2/PLAW-117publ2.pdf)

Most people, including me and probably most people here, received the full EIP3 already and are not eligible for any additional EIP3 on our tax returns that we'll start filing in a few months. So for us, line 30 on our 2021 1040 will be a NOP.

There may, however, be some people (I can imagine for example a high income couple who retired this year) who are still income tax planning for 2021 and might want to get their 2021 income under $150K in order to get the EIP3 with their tax return, having not been eligible based on their 2019/2020 tax returns.

(Feel free to move this whole discussion to the 2021 thread if you think it's worth it.)