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Filing 2021 Taxes: Your Go-To Guide

Updated for Tax Year 2021 • January 14, 2022 12:01 PM


OVERVIEW

For many people, 2021 has been a challenging year for financial and tax planning. Here's everything you need to know to complete your taxes accurately and efficiently this year.


For information on the third coronavirus relief package, please visit our “American Rescue Plan: What Does it Mean for You and a Third Stimulus Check” blog post.


 

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Filing your taxes for the prior year is often top of mind when the new year rolls around. Fortunately, this comprehensive guide can help you get through filing 2021 taxes, whether you file on your own or get help from a tax expert. Here's what you need to know.

Deadline for filing 2021 taxes

One of the first questions most people want an answer to is: When are taxes due?

For 2021 tax returns — those filed in 2022 — the deadline to file your return and pay any tax due has been extended a few days from April 15, 2021 to April 18, 2021 because the 15th falls on a weekend. Individual states typically follow the IRS deadline extensions but if you are unsure then check your state government’s website for more information.

April 18, 2021, is also the deadline for requesting an individual tax return extension and making 2021 IRA contributions.

Filing an extension will postpone your filing deadline until October 17, 2022 which is a couple of days further out than usual since the 15th of October falls on a weekend. Just remember that even if you file an extension to October, any amount of tax that you owe for the year is still due on the earlier April deadline.

If you make estimated quarterly tax payments, the deadline to make your first estimated payment toward 2022 taxes has also been extended to April 18, 2022 due to April 15th falling on a weekend. Even if you wait until the last minute to file your 2021 tax return or file for an extension, you'll still need to calculate your first 2022 quarterly estimate and make a payment by the April deadline.

Form 1040 options

Form 1040 is the federal income tax form that almost all individuals use to report their income to the IRS, claim tax deductions and credits, and calculate their refunds or tax due for the year.

There are two main versions to choose from:

  1. Form 1040. The standard Form 1040 is the version most taxpayers will use. While Form 1040 is only two pages long, many people need to attach additional forms and schedules to their tax returns to report different types of income and claim deductions and tax credits.
  2. Form 1040-SR. Form 1040-SR is a newer version of Form 1040 for people age 65 and older. You can use this form whether you itemize or claim the standard deduction. The basic difference between this version and the standard Form 1040 is that Form 1040-SR uses a larger font and includes a standard deduction table printed right on the form.

There is also the less common Form 1040-NR that is used by nonresident aliens who have U.S. source income and Form 1040-X that is used to amend tax returns that you have already filed but need to be corrected.

2021 Standard Deductions

The 2021 standard deduction increases to $12,550 for single taxpayers and married taxpayers who file separate returns, while married couples filing jointly can claim an amount twice that size at $25,100. Heads of household can claim a standard deduction of $18,800.

Those that are older than 65, or blind, or both over 65 and blind, receive additional standards deductions. For 2021 the addition for married couples filing jointly is $1,350 and $1,700 for those filing as single or head of household. These additional amounts add together so that a married couple filing jointly with both being over 65 years old would get a total of $2,700 in additional standard deduction. If both are also blind then the additional amount is $5,400.

2021 tax brackets

Federal income taxes are progressive, meaning people with higher taxable incomes pay a higher percentage of their income to the federal government than people who earn less. One of the ways the tax system achieves this is through tax brackets.

There are seven tax brackets for the 2021 tax year, ranging from 10% to 37%. Your tax bracket, also known as your marginal tax rate, is the tax rate (bracket) that your last taxable dollar falls into and depends on your total taxable income. Here are the 2021 tax brackets for taxes due April 18, 2022:

Tax Rate Single Head of Household Married Filing Jointly Married Filing Separately
10% Up to $9,950 Up to $14,200 Up to $19,900 Up to $9,950
12% $9,951 - $40,525 $14,201 - $54,200 $19,901 - $81,050 $9,951 - $40,525
22% $40,526 - $86,375 $54,201 - $86,350 $81,051 - $172,750 $40,526 - $86,375
24% $86,376 - $164,925 $86,351 - $164,900 $172,751 - $329,850 $86,375 - $164,925
32% $164,926 - $209,425 $164,901 - $209,400 $329,851 - $418,850 $164,926 - $209,425
35% $209,426 - $523,600 $209,401 - $523,600 $418,851 - $628,300 $209,426 - $314,150
37% $523,601 and Up $523,601 and Up $628,301 and Up $314,151 and Up

For example for 2021, if you're a single filer with a taxable income of $60,000 after taking all of your applicable adjustments and deductions, the first $9,950 of your income will be taxed at 10%. From $9,951 to $40,525, you'll be taxed at 12%. On the remaining $19,475, you'll be taxed at 22%.

Use our Tax Bracket Calculator to estimate your taxable income for 2021 and figure out which tax bracket you're in.

Tax breaks included in pandemic relief bills

There are several tax breaks available on your 2021 tax returns. Here's a quick overview of some of these tax provisions and links:

  • Stimulus payment. Many taxpayers were eligible for three different stimulus checks, also known as Economic Impact Payments. The first two were credits for 2020 tax returns and the third stimulus payment is an advance for the credit for 2021 tax returns. These payments aren't taxable income. When you file your 2021 tax returns, you'll need to provide the amount you received (if any) for the third stimulus payment. If you're eligible for a larger stimulus payment based on your 2021 tax return, you can claim it as a Recovery Rebate Credit.
  • Tax credits for sick and family leave. Self-employed taxpayers and business owners can take advantage of new tax credits for sick and family leave due to the COVID-19 pandemic. For self-employed taxpayers, the credit is based on their average daily self-employment income. For businesses that provided employees with paid sick or family leave due to the pandemic, the credit is based on wages paid.
  • Charitable deductions for non-itemizing taxpayers. Typically, you need to itemize deductions to get a tax break for charitable contributions. For 2021, even if you don't itemize, you can claim up to $300 in charitable cash donations as an "above-the-line" deduction, or up to $600 for those filing joint returns.

Enhanced health insurance subsidies

If you purchase health insurance through the federal exchange, you may be eligible for financial assistance to cover your premiums.

The American Rescue Plan provides higher premium subsidies by ensuring that enrollees pay no more than 8.5% of their income toward the coverage (down from 10%). People earning more than the current cap of 400% of the federal poverty level — roughly $51,000 for an individual or $106,000 for a family of four in 2021 — will become eligible for subsidies for the first time.

If you didn't receive a larger subsidy throughout the year, you may be able to claim the subsidy as a tax credit on your 2021 tax return.

Remember, with TurboTax, we'll ask you simple questions about your life and help you fill out all the right tax forms. With TurboTax you can be confident your taxes are done right, from simple to complex tax returns, no matter what your situation.

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