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There were three significant pieces of tax legislation enacted during 2010: The Hiring Incentives to Restore Employment Act (March, 2010); The Small Business Jobs Act
(September, 2010); and The
Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act (December,
2010), which: ·
Extends
the tax cuts from the 2001 tax act for another 2 years ·
Extends
marriage penalty relief ·
Cuts
the employee part of Social Security payroll taxes from 6.2% to 4.2% ·
Extends
the child tax credit ·
Extends
the elimination of the phaseout of itemized
deductions for two years ·
Extends
the elimination of the personal exemption phase out for two years ·
Extends
the maximum tax rate of 15% on capital gains and dividends ·
Includes
an “AMT patch” for 2010 and 2011 ·
Reinstates
the Federal Estate Tax, but with a $5Million exclusion and a maximum rate of
35% for decedents dying after 12/31/2009 and before 01/01/2013 ·
Extends
the Gift Tax provisions of the 2001 tax act ($1Million exclusion, 35% maximum
tax rate) ·
Imposes
a 0.9% additional Medicare tax for single persons with wages greater than
$200K, and married (joint return) wagtes of more
than $250K. ·
Renews
the state and local sales tax deduction, teachers classroom expense
deduction, higher education tuition deduction, and tax free distributions
from IRAs if paid to a charity Please note: Many of the December tax law changes
require reprogramming of IRS tax management software and reprogramming of
commercial tax preparation software.
The IRS has already advised that they will not accept returns with
certain forms (e.g. Schedule A Itemized Deductions) until after mid-February
2011. Contact me to arrange a briefing on these tax law changes. |