Page 13 - Supplement to Income Tax TY2021

Estimating Your 2021 Taxes

Estimating Your 2021 Taxes

When this Supplement was produced, Congress was considering other tax law changes
that may impact estimated taxes for 2021. See jklasser.com for any update.

Note: The page references in the boldface headings below are For Roth IRAs, the $6,000 or $7,000 contribution
to the text of J.K. Lasser’s Your Income Tax 2021. Page references limit (all Roth contributions are nondeductible) is
within the items themselves (after the headings) are to the pages
of this Supplement unless otherwise noted. phased out for married persons filing jointly and
qualifying widows or widowers with 2021 MAGI
In estimating your 2021 tax liability, take into account exceeding $198,000, up from $196,000, and the
the recent tax law changes on pages 3–5 that may affect phaseout will be complete if MAGI is $208,000 or
your 2021 tax liability, relevant cost-of-living adjustments more. For single taxpayers and heads of household,
to various deduction, credit, and exclusion amounts the phaseout threshold is increasing to $125,000
shown below, the 2021 tax rate tables (see page 15), the from $124,000; the phaseout will be complete if 2021
deductible standard mileage rates for 2021 (see page 5), MAGI is $140,000 or more.
and the Social Security, Medicare, and self-employment For both traditional and Roth IRA contributions,
tax limits for 2021 (see pages 6–7). married persons filing separately are treated as single

if they live apart for the whole year. If the spouses
Retirement Plan Cost-of-Living file separately and live together at any time during
Adjustments for 2021 the year, and either of them is an active participant

Traditional IRA and Roth IRA contributions for 2021 (pages in an employer retirement plan, a deduction for
213–222, 249–252). The basic contribution limit for traditional IRA contributions is phased out for each
traditional and Roth IRAs is $6,000, which is unchanged spouse over a MAGI range of $0 to $10,000. For
from 2020. The $6,000 limit is increased by $1,000 for Roth IRA contributions, the contribution limit for
those who will be age 50 or older by the end of 2021. married persons filing separately is phased out over
For traditional IRAs, the $6,000 or $7,000 (age 50 the $0 to $10,000 MAGI phaseout range if they live
or older) contribution limit is also the deductible limit together at any time during the year, without regard to
except for active participants in employer retirement participation in an employer retirement plan.
plans with modified adjusted gross income (MAGI) Elective deferrals to employer retirement plans
above the phaseout threshold. For active participants
who are married filing jointly or qualifying widows (pages 191–193, 196–199, 718). The basic limit for
or widowers, the phaseout for 2021 deductible elective deferrals in 2021 is $19,500, unchanged
contributions to traditional IRAs begins at MAGI from 2020. The $19,500 limit applies to 401(k),
of $105,000 (from $104,000), with the phaseout 403(b), and 457 plans, the federal government’s
complete when MAGI is $125,000 or more. For Thrift Savings plan, and pre-1997 salary-reduction
single taxpayers and heads of household, the phaseout Simplified Employee Pension (SEP) plans. If such
threshold is $66,000 (from $65,000); the phaseout is plans allows, individuals who are age 50 or older
complete when MAGI is $76,000 or more. by the end of the year may make an additional
The phaseout threshold for a married person filing “catch-up contribution.” The catch-up contribution
jointly who is not an active plan participant but whose limit remains at $6,500.
spouse is an active participant increases slightly to For a SIMPLE IRA, the deferral limit is unchanged
$198,000 (from $196,000), and the phaseout for that in 2021 at $13,500 with a catch-up contribution of
nonparticipant spouse is complete when MAGI is $3,000 for those age 50 or over by the end of 2021
$208,000 or more. (unchanged from 2020).

Supplement to J.K. Lasser’s Your Income Tax 2021 | 11