Your income, deductions, credits, and filing status are just a few of the variables that affect how much tax you owe. A progressive tax system is used by the federal government as well as many state governments, which implies that the more you make, the more of your income will be taken out as taxes. You might also have to pay taxes such as sales taxes, property taxes, company taxes, Social Security and Medicare taxes, in addition to your income taxes. Why Am I Due Such a Large Tax Amount in 2021?
There may be a number of reasons why your tax bill is more than you anticipated. A change in income or deductions from the prior year is one such explanation. Your tax obligation might have increased, for instance, if you got a raise or a bonus at work. Alternately, your tax obligation can have increased if you are no longer eligible for a particular deduction or credit.
Changes in tax rules are another factor that could increase your tax liability. The tax law saw major modifications as a result of the 2017 passage of the Tax Cuts and Jobs Act (TCJA), including adjustments to the standard deduction, personal exemptions, and tax rates. You might have underpaid your taxes for the year if you didn’t modify your paycheck withholding or anticipated tax payments to account for these changes.
Massachusetts residents who own businesses must pay both state and federal taxes on their business revenue. Depending on the kind of business entity you have, Massachusetts has several business tax rates. For instance, pass-through businesses like S corporations and partnerships are taxed at the individual income tax rate while corporations are subject to a flat tax rate of 8%.
Massachusetts has taxes that are relatively high when compared to other states. This is partly a result of the state’s high cost of living and substantial public investment in infrastructure, healthcare, and education. Additionally, Massachusetts has a progressive income tax system, which means that people with greater incomes must pay a larger share of it in taxes. To assist businesses and people pay less in taxes, Massachusetts also provides a number of tax credits and deductions.
The state income tax standard deduction is available in Massachusetts. The standard deduction is $12,550 for single filers and $25,100 for married couples filing jointly for the 2021 tax year. The state of Massachusetts does permit taxpayers to itemize deductions, which could result in greater tax savings if they have substantial deductions like mortgage interest, charity giving, or medical costs.
In conclusion, being aware of your tax responsibilities is essential to ensuring that you are abiding by the law and avoiding any possible fines or penalties. Your income, deductions, credits, and filing status are just a few of the variables that affect how much tax you owe. There could be a number of causes for your tax bill to be higher than you anticipated, such as adjustments to your income, tax legislation, or deductions. Massachusetts offers a variety of tax credits and deductions to help individuals and businesses lessen the tax burden while having relatively high rates compared to other jurisdictions.