From press release
President Barack Obama has signed into law the 2010 Tax Relief Act, a package of more than $800 billion of extended tax cuts that will benefit all Americans. All tax rates approved under President George W. Bush and many of the “Bush era tax cuts” are extended for two more years.
“One important measure is an additional patch on the Alternative Minimum Tax, an estimated additional 21 million households would have been subject to the higher taxes. Overall, there’s something in it for families and individuals of various income levels, and for businesses,” commented Gene Baker, franchise owner, of Liberty Tax Service.
Here are some of the main provisions:
→ Unemployment insurance benefits are extended through 2011 for those out of work longer than 26 weeks, but no longer than 99 weeks.
→ Extends the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) tax rates for two years.
→ Extends enhancements made to the Earned Income Tax Credit, Child Tax Credit, and the Hope (now called American Opportunity Tax credit) credit adopted in the 2009 American Recovery and Reinvestment Act (ARRA) that would have expired Dec. 31, 2010.
→ Businesses will be able to write off 100 percent of their capital investments for tax purposes for items placed in service after Sept. 8, 2010, through Dec. 31, 2011, up from the 50 percent bonus depreciation. The 2010 Tax Relief Act also makes the 50 percent bonus depreciation available for qualified property placed in service after Dec. 31, 2011, and before Jan. 1, 2013.
→ A cut in Social Security taxes withheld will mean an immediate increase in take-home pay for millions of Americans. Social Security taxes (FICA) will be cut by 2 percentage points for 2011 so employees will pay 4.2 percent of wages earned to Social Security instead of 6.2 percent. For a taxpayer earning $50,000 a year, this will result in an extra $1,000 in their pocket over the year.
→ The individual tax extenders of the state and local sales tax deduction, higher education tuition and fees deduction, teacher’s classroom expense deduction and charitable contribution of IRA proceeds were extended for 2010 and 2011.
→ The 2010 Tax Relief Act provided another “patch” for the Alternative Minimum Tax (AMT).
→ There’s a change in the inheritance tax. The first $5 million of an estate can pass tax-free to heirs; anything over will be taxed at 35 percent.
→ Current capital gains tax rates of 0 percent (for those in the 10 and 15 percent tax brackets) and 15 percent will remain in place for two more years.
→ Extends the repeal of itemized deduction and personal exemption phase-outs for two years.
About Liberty Tax Service
Liberty Tax Service is the fastest-growing retail income tax preparation company in the industry’s history. Founded in 1997 by CEO John T. Hewitt, a pioneer in the tax industry, the company has prepared more than 8 million individual income tax returns. With 41 years of tax industry experience, Hewitt is the most experienced CEO ever in the tax preparation business, having also founded Jackson Hewitt Tax Service (NYSE:JTX). Liberty Tax Service provides computerized income tax preparation, electronic filing, and online filing through eSmart Tax.
From the Jan. 12-18, 2011 issue