Page 20 - Supplement to Income Tax TY2021

Updates, Additions, and Corrections to the Text of Your Income Tax 2021

If you did not receive a second round payment, or Itemized deduction for personal casualty or theft loss
a first round payment, or you only received a partial from qualified disasters (pages 426, 434, 436). The
payment (or payments), complete the Recovery Taxpayer Certainty and Disaster Tax Relief Act of
Rebate Credit Worksheet to determine if you can 2020 expands the special rules for qualified disaster
claim the recovery rebate credit on your 2020 return losses to include unreimbursed casualty or theft
(Line 30, Form 1040 or 1040-SR) based upon your losses of personal-use property that are attributable
2020 AGI and number of qualifying children. The to major disasters declared by the President from
Recovery Rebate Credit Worksheet is shown on page January 1, 2020, through February 25, 2021,
45 of this Supplement. Also see the “Recovery rebate provided they began after December 27, 2019, and
credit” item below. no later than December 27, 2020, and ended no

Tuition and fees deduction repealed after 2020 (page later than January 26, 2021. A net qualified disaster
339, 622–623). The new law (see page 5 of this loss is subject to a $500 floor on Form 4684, rather
Supplement) repeals the tuition and fees deduction for than the regular $100 floor for losses on personal-
years after 2020. use property, but the 10% of adjusted gross income

Standard deduction increased by net qualified disaster floor does not apply.
loss (Filing Instruction, page 345). The rules allowing Extension of livestock replacement period (pages
taxpayers who do not itemize deductions to increase 442, 445). In Notice 2020-74, the IRS provides
their standard deduction by a net qualified disaster loss certain farmers and ranchers a one-year extension
have been expanded by the The Taxpayer Certainty beyond the normal four-year replacement period that
and Disaster Tax Relief Act of 2020. A qualified generally applies when livestock is sold due to drought.
disaster loss now includes a casualty or theft loss of The Appendix to Notice 2020-74 has a list of the
personal-use property attributable to a major disaster qualifying counties.
that meets the requirements listed below under
“Itemized deduction for personal casualty or theft loss Business meal deductions (page 464-466). The IRS
from qualified disasters.” A net qualified disaster loss issued final regulations on deductions for business
from Form 4684 is shown on Line 16 of Schedule A meals that substantially incorporate earlier guidance
(Other itemized deductions), where it is added to your in proposed regulations and in Notice 2018-76 (T.D.
otherwise allowable standard deduction; the combined 9925, 2021-2 IRB 296).
amount is then claimed as your standard deduction on The Taxpayer Certainty and Disaster Tax Relief Act
Line 12 of Form 1040 or 1040-SR. of 2020 allows a 100% deduction for business meals
(food and beverages) provided by a restaurant in 2021
Waiver of AGI limit for cash contributions (pages
372–373). The Taxpayer Certainty and Disaster Tax and 2022. The new law does not define “restaurant”;
Relief Act of 2020 extends the 100% of AGI limit for IRS guidance is likely. The new law does not affect
qualifying cash contributions to contributions made 2020 business meal deductions.
in 2021. Filing your child’s return (page 503). In the first

Mortgage insurance premiums deduction (page paragraph of 24.1, under “1.”, the parenthetical
385). The deduction for mortgage insurance premiums should be “($2,200 for 2020). The second sentence
was extended through 2021 by the Taxpayer Certainty under “3.”, should read “For 2020, the deduction is
and Disaster Tax Relief Act of 2020. $1,100 (13.5).”

Medical and dental expenses 7.5% floor (page 405). The Computing Kiddie tax on child’s return (page
7.5% of AGI floor for deducting medical and dental 505). Please disregard the erroneous references to
expenses was scheduled to rise to 10% of AGI after 2020, Form 6251 in the third, fourth and fifth paragraphs of
but the 7.5% floor has been permanently extended. 24.3. All the references should be to Form 8615.

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