2021 U.S. Year End Tax Planning

Individual Tax Considerations for 2021


As we reach the end of the year, now is the time to start sorting your tax documents for an on time filing of your individual income tax return.
Following is a listing of items to consider when preparing for the preparation of your individual tax return:

  • Note any changes to your marital status, or the birth (or death) of dependent children. For divorced clients, please submit a copy of the divorce decree and child support agreement.
  • Did you receive or pay alimony payments? Depending on the date of the divorce, this may no longer be a tax consideration.
  • At any time during 2021, did you sell, receive, exchange or otherwise transact any business in any virtual currency?
  • What was the amount of the 2021 Economic Impact Payment, include IRS Notice 1444-C which would indicate the total amount received.
  • While the mandate for health insurance remains, the penalty for failure to maintain minimum essential coverage on the federal tax return has been eliminated.
    However, many states still require health care coverage. If your health care coverage is through either the state or federal Marketplace, include Form 1095-A with your tax documents.
  • Include all Forms W-2’s with your tax documents.
  • Include any interest income received on Form 1099-INT.
  • Did you have a brokerage account or investments? Include all Forms 1099- DIV and Forms 1099-B with your tax documents.
  • If you sold any stock or assets, be sure the initial cost (or basis) is included with the sale documents. 
  • Did you receive funds from a pension or IRA? Include Forms 1099-R with your tax documents.
  • Are you a shareholder in an S corporation or partner in a partnership? Are you the beneficiary of a trust or estate?
    If so, you will receive a Schedule K-1 for your representative share. We are aware that these generally tend to come later than sooner,
    so let us know if you are waiting for receipt of a ScheduleK-1 and we will extend the individual income tax return.
  • If you received unemployment in 2021 be sure to go onto your state website to download the Form 1099-G. Most states have stopped mailing out this form automatically.
    The same holds true if you received a state refund in 2021 on your 2020 state income tax return.
  • Are you receiving Social Security?  Include the annual statement from the Social Security Administration. If you have an SSA account, this form is available on their website.
  • Include any other miscellaneous income, such as:
    • Gambling winnings
    • Hobby income
    • Legal settlements
    • Income not subject to self employment tax
  • Do you own rental property? If so, include an accounting of the income received and expenses paid on behalf of the property.
  • Child and dependent care expenses – include a statement with the provider name and address, tax identification number and amount paid.
  • Did you pay education expenses for either you or a dependent? Include the tuition amount paid as well as other expenses for books, computers, internet, room and board.
    The name and address and the EIN of the education institution is also needed.
  • Are you a teacher in grades K through 12, working at least 900 hours a year? Include any out of pocket expenses for materials and supplies purchased.
  • Did you receive the Advanced Child Credit (which were issued July 15 through December 15)? Include the IRS Letter 6419 which will provide the total amount paid.

While many taxpayers will not be able to itemize due to the increased amount of the standard deduction, following are some items to consider which may provide a better tax benefit:

  1. Medical and dental costs, including any insurance premiums paid
  2. Tax paid, including real estate, state taxes, or personal property taxes
  3. Interest paid on a primary or secondary home
  4. Points paid on the purchase or refinance of a home
  5. Investment interest
  • Did you pay on a student loan? Did your employer provide any assistance in payment of the loan? Include the interest statement from the financial institution along with any payments made on your behalf by your employer.
  • Include a listing of charitable contributions paid with cash and a separate listing of non-cash donations.
  • Did you have a casualty loss as a result of a federally declared disaster area?  Provide the total amount of the loss and any payments by your insurance company or government agencies such as FEMA.
  • Did you make a contribution to your IRA or other deferred compensation plan? If so, Include Form 5498 with your tax documents.

While not a comprehensive list, this includes some of the more popular tax items we encounter on tax returns. Our office will be sending out organizers in the new year. We would appreciate your cooperation in completing the organizer completely. The above listing will help with providing the information needed to file a complete and accurate income tax return.

Contact our office if there are any questions regarding the tax information needed.