From Carol McAtee’s CPA firm in St. Petersburg, FL – On December 17, 2010, President Obama signed the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 into law. The Act extends the Bush income tax cuts for all taxpayers for two years, 2011 and 2012, provides some alternative minimum tax (AMT) relief for middle income taxpayers, and implements a new one year 2 percent payroll tax reduction for employees and self-employed individuals. For wages earned in 2011, the employee share of the Social Security tax will be reduced from 6.2 percent to 4.2 percent on all wages earned up to the taxable wage base ($106,800 in 2010).
The Act also extends a number of tax incentives and other expiring provisions including:
- The 10 percent, 15 percent, 25 percent, 28 percent, 33 percent, and 35 percent individual income tax rates are extended for two years and will be indexed for inflation.
- The maximum tax rate for long term capital gains and qualified dividends of 15 percent (zero percent for taxpayers in the 10 and 15 percent income tax brackets) will be extended for the two years.
- The extended tax rates will incorporate marriage penalty relief, and the standard deduction for joint returns will continue to be twice the standard deduction for single returns.
- The child tax credit will remain at $1,000 per child for 2011 and 2012, and will not revert back to $500 per child until 2013.
- The tax credit for dependent care expenses is extended through 2012.
- The provision allowing taxpayers to elect to deduct state and local sales taxes in lieu of state and local income taxes is extended for an additional two years (through December 31, 2011).
- The American Opportunity Tax Credit for higher education expenses is extended through 2012.
Contact us at McAtee & Associates and we will insure that you claim all the appropriate tax deductions and credits available, which will result in a lower tax liability and less money due to the IRS.
ANY TAX ADVICE IN THIS COMMUNICATION IS NOT INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED, BY A CLIENT OR ANY OTHER PERSON OR ENTITY FOR THE PURPOSE OF (i) AVOIDING PENALTIES THAT MAY BE IMPOSED ON ANY TAXPAYER OR (ii) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY MATTERS ADDRESSED HEREIN.
