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Pg R1-88: Residential Energy Credit – 26% for expense on properties installed in 2021 [vs. 30% for2020] Pg R1-88: Saver’s Credit Retirement Savings Contribution CreditAGI thresholds for 2021 (only for understanding - do not ibution(per taxpayer)Maximum credit(per taxpayer) 0 - 39,500 0 - 19,75050% 2,000 1,000 39,501 - 43,000 19,751 - 21,50020% 2,000 400 43,001 - 66,000 21,501 - 33,00010% 2,000 200Over 66,000Over 33,0000%n/an/a Pg R1-99 PenaltiesFor returns not filed within 60 days of due date (including extensions), IRS may assess a minimumpenalty which is lesser of 435 for 2021 or 100% of amount of tax due. Pg R2-22: Section 179 Expense Limit for 2021 Up to 1.05 million [vs. 1.04 million for 2020] Phase-out – Reduced by for amount by which Sec 179 property placed in service during theyear exceeds 2.62 million for 2021 [vs. 2.59 million for 2020] Pg R4-43: Form 1041 – Estates & Trust, Income Tax Rates for 2021 (only for understanding - donot memorize!):Column AColumn BColumn CColumn DTaxable AmountoverTaxableAmount not overTax on Amount inColumn ARate of tax on excess overamount in Column A 0 2,650 010% 2,651 9,550 26524% 9,551 13,050 1,92135% 13,050- 3,14637% Pg R4-53, R4-54, R4-55 & R5-21: Gift exclusion for “present interest” gifts for 2021 remains at 15,000, and 30,000 for MFJ if electing to split gift) [same as 2020] Pg R4-49, R4-51, R4-52, R4-53, R4-55, R4-60: Unified Credit and Lifetime Exclusion – Unified Credit: 4,625,800 for 2021 [vs. 4,577,800 for 2020] Life-time Exclusion: 11,700,000 for 2021 [vs. 11,580,000 for 2020]

Pg R5-31: Failure-to-file-penalty (for returns to be filed in 2022) – Need to memorize! If the return is filed more than 60 days after due date (or extended due date), the minimum penaltyfor 2021 is:o Individuals – smaller of 435 or 100% of the unpaid tax [same as 2020]o C-Corps – smaller of 435 or 100% of the unpaid tax [same as 2020] Since S Corps & Partnerships generally do not have taxes due at the entity level, the failure-to-filepenalty for 2021 is:o S Corps (if no tax is due) - 210/month (for a max. of 12 months) x # of shareholders [vs. 205 for 2020]o Partnership - 210/month (for a max. of 12 months) x # of partners [vs. 205 for 2020] Pg R6-35: Income Tax Return Preparer Penalties [for returns or claim of refund filed to be filedin 2022] – Need to memorize!Penalties imposed forUnderstatement of tax caused by: Unreasonable positions Preparer’s reckless or intentional disregard of rules orregulationsAmount of PenaltyGreater of 1,000 or 50% ofpreparer feeGreater of 5,000 or 75% ofpreparer feeFailure to furnish copy of return to taxpayer 50 per return/up to 27,000 peryearFailure to sign return 50 per return/up to 27,000 peryearFailure to furnish identifying number of preparer on return 50 per return/up to 27,000 peryearFailure to retain a copy of return for 3 years or maintaina list of names and ID numbers of the taxpayers forwhom the returns are prepared 50 per return/up to 27,000 peryearFailure to correct information returns 50 per return/up to 27,000 peryearEndorsing or negotiating a refund check issued to ataxpayer 545 per check/No limit formaximum penaltyFailure to be diligent in determining eligibility for certainbenefits (EIC, child tax credit, other dependent credit,American opportunity credit, HH filing status) 545 for each failure on eachreturn/ No limit for maximumpenaltyUnauthorized disclosure or use of information furnished for,or in connection with, the preparation of a return 250 per disclosure/up to 10,000 per year. Criminalpenalty of 1,000 per disclosure/up to 100,000 per year or up to1 year imprisonment, or both plusthe cost of prosecutionFraudulent returns, statements, or other documentsGuilty of misdemeanor/ fine upto 10,000 ( 50,000 forcorporation) or up to 1 yearimprisonment, or both

Fraud or false statementsGuilty of felony/ fine up to 100,000 ( 500,000 forcorporation) or up to 3 yearsimprisonment, or both plus costsof prosecutionFraudulent or deceptive conduct, includingmisrepresentation of his eligibility to practice before theIRSCourts may enjoin such personfrom further engaging in suchconduct or, in extreme cases,from continuing to act as a taxreturn preparer altogether This space has been intentionally left blank

Taxpayer Certainty and Disaster Tax Relief Act, 2020 R1-26 Education & TuitionExtended the provision through 2025 that allowed employers to repay an employee student loan up to 5,250, a non-taxable fringe benefit for an employee. The 5,250 cap applies to both the student loanpayment benefit as well as other educational assistance (e.g., tuition, fees, books) provided by theemployer under the current law. R1-59 Tuition & Fees deductionRepealed for tax years beginning 2021. R1-66 Mortgage Insurance premiumExtended the deductibility through 2021. The qualified mortgage insurance premium is treated asinterest for the purpose of mortgage interest deduction and is subject to phase out. The deductionphases-out for taxpayers with AGI over 100k ( 50k MFS). R1-64 Medical & Dental ExpensesPermanently lowered the threshold for medical and dental expense deduction to 7.5% of AGI for alltaxpayers. R1-84 Education creditIncreased the phase-out limit for Lifetime Learning Credit from 58k ( 116k for MFJ) to 80k ( 160k). This space has been intentionally left blank

Consolidated Appropriations Act, 2021Key Provisions for Individuals R1-24 Carryovers for Flexible Spending Accounts for Health and Dependent CareAllows employers to carryover the unused amounts remaining in the FSAs from 2020 or 2021 to thenext year (2020 to 2021 and 2021 to 2022). Any amount is allowed (existing carryover limit of 550for 2021 carryover doesn’t apply) R1-26 Student loan repayment benefits from the employer*Extends tax-free repayment of student loan debt under the employer’s educational assistance plan upto 5,250 per year through 2025. R1-34 & R3-35 Business MealsBusinesses can claim 100% deduction food and beverage for 2021 and 2022. This includes carry-outand delivery meals. R1-50 Cancellation of home mortgage debtCancellation of home mortgage debt up to 750,000 can be excluded from gross income from tax yearsbeginning 2021 through 2025 (limit was 2 million under the CARES Act 2020). R1-54 Penalty free early access to retirement plan fundsPermits penalty free withdrawals up to 100,000 from retirement plans, including IRAs, for eachdeclared disaster incident that took place on or after December 28, 2019 through December 28, 2020(suffered loss from damage to the principal residence in a ‘Presidentially Declared’ disaster area).Distributions allowed until June 25, 2021and can be repaid to IRA within three years from thedistribution receipt date. R1-57 Educator ExpensesEligible expenses for educator expense deduction to include cost of personal protective equipment(PPE) and other supplies to prevent the spread of COVID-19. The change is retroactive to suppliespurchased after March 12, 2020. R1-59 Charitable Contributions (‘Above-the-line’ deduction) for non-itemizers*Doubles above-the-line deduction for cash charitable contributions to 600 for married taxpayers filingjointly for contributions made in 2021 only ( 300 is for single and 150 for married taxpayer who filesseparately) R1-67 Increased charitable contribution deduction for individuals and trusts*Extends 100% of AGI limitation for cash contribution to qualifying public charities for 2021.Note: Similar to 2020, temporary suspension of 60% of AGI limit is applicable only for cashcontributions made in 2021 to public charities or Sec 509(a)(3) supporting organizations i.e.,organizations that support other exempt organizations, usually other public charities. Carry-over

contributions do not qualify for 100% limitation and 100% limitation is applied after taking into accountother contributions subject to limitation. R1-82 Recovery Rebate Credit (RRC)*Provides for an additional recovery rebate, a second round of stimulus payment of up to 600 perindividual ( 1,200 if married filing jointly) and 600 for each qualifying child. No rebate for anindividual claimed as a dependent on another’s tax return. R1-83 & R1-86 Higher Income for Earned Income Credit and Additional Child Tax creditAllows taxpayer to use earned income from immediately preceding tax year (2019 for 2020 and 2020for 2021) for the purpose of determining EIC and ACTC. R1-84 Modified Adjusted Gross Income limits for Education CreditSame for lifetime learning credit and American Opportunity Credit (were different until 2020)Education CreditAmerican Opportunity TaxCreditLifetime Learning Credit First four years of college, upto 2,500Phase out AGI 80,000 - 90,000 ( 160,000 180,000 for MFJ)All years of post-secondary Phase out AGIeducation 80,000 - 90,000 ( 160,000 180,000 for MFJ) [vs. 59,000- 69,000 ( 118,000 - 138,000for MFJ for 2020]R1-88 Residential Energy CreditExtended through 2022. R1-90 Employee Retention Credit (ERC)*Permits 70% credit (increased from 50% under the CARES Act) on qualified wages up to 10,000 peremployee, per quarter (changed from per annum under the CARES Act), through June 2021. Qualifiedemployers can claim up to 14,000 credit per employee in 2021.Note: ERC exceeding employer’s portion of payroll taxes is refundable.Qualified employers:- Minimum 500 employees (increased from 100 employees under the CARES Act)- Gross receipts in Q1&Q2 of 2021 must be less than Q1&Q2 of 2019/Q3&Q4 of 2020 by 20% ormore R1-93 Delay in deposit of payroll taxes*Extension of time for employers to deposit social security taxes [Part of FICA tax] for wages paid fromSeptember 1, 2020 through December 31, 2020. The payment period has been extended throughDecember 31, 2021. A further delay will attract interest and penalty for the employers, not employees,beginning Jan 1, 2022.

R1-99 & R5-32 Penalty for overstating charitable deductionsPenalty for overstating charitable deduction increased from 20% to 50% of the underpayment of tax.Key Provisions for Corporations R1-34 & R3-35 Business MealsBusinesses can claim 100% deduction food and beverage for 2021 and 2022. This includes carry-outand delivery meals. R3-36 Charitable contributions by Corporations*Extends 25% of ATI limitation for charitable contributions made in 2021. This space has been intentionally left blank

American Rescue Plan Act, 2021 R1-82 Recovery Rebate Credit (RRC)*Provides for a Recovery Rebate Credit, which is the third round of stimulus payment during theCovid-19 pandemic to qualifying taxpayers (AGI 80,000 for single/ 160,000 for MFJ and 120,000 for HOH). The recovery rebate is up to 1,400 per qualifying individual (or 2,800 ifmarried filing jointly) and 1,400 per qualifying child. Note: CARES Act 2020 provided the first roundof stimulus payments, starting in March 2020, CAA of 2021 provided the second round of payments,starting in December 2020.Qualifying taxpayers for RRC:--Taxpayer with Social Security Number valid for employment (Individual Taxpayer IdentificationNumber ITIN is not eligible, unless spouse has SSN who was also a member of U.S Armed Forcesany time during the tax year for which the rebate is claimed)Not claimed as dependent on other’s tax returnChild with SSN or Adoption Taxpayer Identification Number ATIN are eligible if parents haveSSN.Can be claimed for any child regardless of age, if claimed as dependent i.e., an adult child/ childborn anytime in 2021/dependent children who are in college/ adult relatives claimed as dependent.*Originally provided under the CARES Act, 2020Refer: CARES Act update [Q4 2020] only for these provisions.

Miles CPA Review: REG – Q3 2021 Updates Q3 2021 Updates – effective July 1, 2021 -CPA Exam Blueprint changes - limit changes Note: These changes are inflation indexed . As per the AICPA, 2021 apply from Q3 2021 onwards (whereas 2020 apply for Q1 and Q2 2021). These changes are NOT tested on the