Updated to reflect the changes to the 2021 tax code, this authoritative text offers step-by-step instructions that guide you through the worksheets and forms you need to file your taxes according to the best tax strategy for your financial situation. Approachable yet comprehensive, this highly regarded resource offers tax-saving advice on maximizing deductions and sheltering income and provides hundreds of examples of how up to date tax laws apply to individual taxpayers. Additionally, special features inserted throughout the text highlight important concepts, such as new tax laws, IRS rulings, court decisions, filing pointers, and planning strategies. It will include important information that the American Rescue Plan Act (ARPA) and the Consolidated Appropriations Act, 2021 (CAA) have on tax filings.

What’s New for 2021 xxvii

Tax News for 2021 xxvii

Key Tax Numbers for 2021 xxx

Tax-Saving Opportunities for 2021 and Beyond xxxiii

Pending Tax Rule Changes xxxiv

Expiring Provisions xxxv

Infrastructure Investment and Jobs Act xxxvi

Filing Basics 1

Filing Status 9

Reporting Your Income 35

Wages, Salary, and Other Compensation 37

Fringe Benefits 56

Dividend and Interest Income 84

Reporting Property Sales 112

Retirement and Annuity Income 174

IRAs 214

Income From Real Estate Rentals and Royalties 267

Loss Restrictions: Passive Activities and At-Risk Limits 287

Other Income 317

Claiming Deductions 341

Deductions Allowed in Figuring Adjusted Gross Income 343

Claiming the Standard Deduction or Itemized Deductions 349

Exceed Your Itemized Deductions? 351

Charitable Contribution Deductions 356

Itemized Deduction for Interest Expenses 384

Deductions for Taxes 402

Casualty and Theft Losses and Involuntary Conversions 431

Other Itemized Deductions 455

Travel and Meal Expense Deductions 458

Personal Tax Computations 479

Dependents 481

Figuring Your Regular Income Tax Liability 495

Alternative Minimum Tax (AMT) 500

Computing the “Kiddie Tax” on Your Child’s Unearned Income 508

Personal Tax Credits Reduce Your Tax Liability 514

Tax Withholdings 538

Estimated Tax Payments 546

Additional Medicare Tax and Net Investment Income Tax 552

Tax Planning 559

Tax Savings for Residence Sales 561

Tax Rules for Investors in Securities 578

Tax Savings for Investors in Real Estate 595

Tax Rules for Investors in Mutual Funds 609

Educational Tax Benefits 618

Special Tax Rules for Senior Citizens and the Disabled 636

Members of the Armed Forces 651

How To Treat Foreign Earned Income 659

Planning Alimony and Marital Settlements 670

Other Taxes 676

Gift and Estate Tax Planning Basics 682

Business Tax Planning 691

Income or Loss From Your Business or Profession 693

Retirement and Medical Plans for Self-Employed 723

Claiming Depreciation Deductions 736

After 1980 and Before 1987 750

Deducting Car and Truck Expenses 753

Sales of Business Property 768

Figuring Self-Employment Tax 775

Filing Your Return And What Happens After You File 785

Filing Your Return 787

Filing Refund Claims, and Amended Returns 795

If the IRS Examines Your Return 799

2021 Tax Forms 813

Form 1040 815

Form 1040-SR 817

Schedule 1 821

Schedule 2 823

Schedule 3 825

Schedule A 827

Schedule B 828

Schedule 8812 829

Form 2441 832

2021 Tax Table 834

2021 Tax Computation Worksheet 846

2021 Earned Income Credit (EIC) Table 847

Tax Law Authorities 857

Legislative Authorities 859

Administrative Authorities 859

Judicial Authorities 860

Citations of Authority 863

Key to Citations 864

Filing Basics 865

Practice Before The IRS 975

How Returns Are Examined 977

Audit Rules for Partnerships 984

The Time Limits Within Which the IRS Must Act for Additional Taxes 984

Filing Refund Claims 990

How to Arrange Closing Agreements and Compromises 994

How to Get the IRS’ Opinion on a Tax Problem 996

Circular 230: Practice Before the IRS 1002

Tax Return Preparer Penalties 1009

Glossary 1015

Index 1021