With a new year comes new tax numbers. Adjustments to tax brackets, standard deductions, exemptions, and more are now available in Moneytree Plan.
For Moneytree Plan Users
Our online products update automatically so no action is required if you use Moneytree Plan. For Moneytree Plan users, we also added the option “Use 2020 Tax Calculations” on the report generation screen in case you have a need for the old tax tables. In addition, the Consolidated Appropriations Act of 2021 has some small changes now implemented in Moneytree Plan.
Changes to RMD Life Expectancy Tables
Moneytree Plan now uses new life expectancy tables for RMDs starting in 2022 and beyond. Since the new tables officially go into affect in 2022, RMDs taken this year will still use the old life expectancy tables. The program now keeps track of 6 different life expectancy tables for RMDs.
For RMDs taken in 2021, we still use the old tables provided by IRS Publication 590:
- Table I: Inherited IRAs distributed based on RMDs but not rolled over into the beneficiary’s own IRA.
- Table II: Traditional and employer sponsored Roth retirement accounts where the owner is more than 10 years older than their spouse.
- Table III: Traditional and employer sponsored Roth retirement accounts where the owner is 10 or less years older than their spouse.
The new tables for RMDs beginning in 2022 we retrieved from Federal Register:
- Table 1: Inherited IRAs distributed based on RMDs, but not rolled over into the beneficiary’s own IRA.
- Table 3: Traditional and employer sponsored Roth retirement accounts where the owner is more than 10 years older than their spouse.
- Table 2: Traditional and employer sponsored Roth retirement accounts where the owner is 10 or less years older than their spouse.
Consolidated Appropriations Act of 2021
Congress passed the Consolidated Appropriations Act of 2021 at the end of 2020. This required some additional changes to Moneytree Plan. These changes include:
- The 7.5% threshold to itemize Medical Expenses has been made permanent.
- Filers can itemize charitable contributions up to 100% of their AGI, an extension of the CARES Act.
- The $300 charitable deduction per tax filer not itemizing has been made permanent.
For a more detailed summary of the changes from the Consolidate Appropriations Act of 2021, see this article from the Journal of Accountancy.
Routine Updates for Moneytree Plan
There have also been several routine updates to tax policies. The IRS releases annual adjustments for various tables and values that index for inflation. The list below provides a summary of the updates implemented in Moneytree Plan:
- Standard Deduction increases:
- Single: $12,550 (up from $12,400 in 2020)
- Joint: $25,100 (up from $24,800 in 2020)
- Head of Household: $18,800 (up from $18,650 in 2020)
- Federal tax bracket break-points increased
- Estate exclusion amount increased to $11,700,000 (up from $11,580,000 in 2020)
The Tax Foundation provides an easy to read, detailed summary of changes for the 2021 tax year. Read more about the 2021 tax changes from the Tax Foundation.
Much of the same information, including some additional information on estate taxes, can be found on the IRS website. Read more about the 2021 tax changes from the IRS.
For Desktop Users
If you are a desktop user and have not received the prompt to update, use the following links to install the version you need:
This year’s tax update includes a couple of changes beyond the usual adjustments posted by the IRS. One of these includes new Required Minimum Distribution (RMD) tables that go into affect starting in 2022.