Archive for July, 2010
What to Expect from your Taxes in 2011
The 2010 Tax Season May Have Come to a Close, But It’s Never
Too Early to Start Thinking About Next Year!
With all of the changes that were put in place to help stimulate the economy
last year, what impact might they have in the next year. Should you expect to
pay more or less taxes in 2011?
Some early predictions on what may change and what is likely to stay the
same for next year:
• New Vehicle Credit — This tax provision, which allowed taxpayers to
take the itemized deduction on sales tax paid for a new vehicle purchase,
has expired.
• State and Local Sales Tax Deduction — Unless Congress decides to
extend it, taxpayers who itemized will no longer be allowed to deduct state
and local sales taxes, as this provision expired December 31, 2009.
• Medicare Tax — Although the healthcare reform bill included a
number of tax provisions that will affect individual taxpayers and employers,
particularly an added Medicare tax on higher-income individuals, the
changes will not apply until 2013.
• Unemployment Benefits — For 2009, the first $2,400 of
unemployment benefits were tax exempt. This tax benefit will not be
available to those unemployed in 2010 unless Congress votes to extend it.
• Gift Tax Exclusion — As inflation remained largely flat from 2009 to
2010, the annual gift-tax exclusion should remain unchanged. That means
that individuals can “gift” up to $13,000 per person (to as many
individuals as desired) without any tax considerations.
• Alternative Minimum Tax (AMT) Exemption Rollbacks — New
scaled back exemption rates for 2010 are expected to affect an astounding
one in five taxpayers. The scaled back exemptions for 2010 are:
$33,750 for single taxpayers; $45,000 for married tax payers filing jointly
or qualifying widower(s); and $22,500 for married filing separately.
• Making Work Pay Credit — Part of the American Recovery and
Reinvestment Act, this credit provides taxpayers with a refundable tax
credit of up to $400 for qualified working individuals and up to $800 for
qualified married couples filing jointly. Despite criticism on the way this
credit was handled in its first year, it will continue in 2010.
These are just a few of the things that can directly impact your 2010 tax
return. Contact your Jackson Hewitt office to see if you need to make any
adjustments now, to put you in a better position for the next tax season.
