Overview of New Tax Law - Business (Jan-23-2011, 85 days left)

Today I am going to talk about the Business Incentives in the New Tax Law. They are quite beneficial to the business entities.

1. Bonus Depreciation

The Tax Relief Act boosts 50% bonus depreciation to 100% for qualified investment made for period (Sep-8-2010 to Jan-1-2012). It also makes 50% bonus depreciation for period (Dec-31-2011 to Jan-1-2013).

2. Small Business Expensing

The 2010 Small Business Jobs Act increased the Code Sec. 179 dollar and investment limits to 500,000 and 2 million for tax years beginning in 2010 and 2011.

The 2010 Tax Relief Act provides for a 125,000 dollar limit and a 500,000 investment limit for tax year beginning in 2012 (sunsetting after Dec-31-2012)

3. Research Tax Credit

The 2010 Tax Relief Act renew the Research Tax Credit through Dec-31-2011.

4. Small Business Stock

The 2010 Small Business Jobs Act enhanced the exclusion of gain from qualified small business stock to non-corporate taxpayers. For stock acquired after Sep-27-2010 and before Jan-1-2011, the exclusion is 100%.

The 2010 Tax Relief Act extends the 100% exclusion for one more year, for stock acquired before Jan-1-2012.

5. Work Opportunity Tax Credit

The 2010 Tax Relief Act extends the WOTC for individuals who begin employment after Aug-31-2011 and before Jan-1-2012, but with some modifications.

PSQ

Sources: http://tax.cchgroup.com/downloads/files/pdfs/legislation/bush-taxcuts.pdf

Overview of New Tax Law -Individual(Jan-22-2011, 86 days left)

December 17 the president signed into law the Tax relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010. Below is the summary of some of the provisions.

1. Capital Gains Taxes

The sunset rule in the Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA): it is scheduled to rise to 20% in 2011 (10% for taxpayers below 25% income tax bracket)

Tax Relief Act: it continues current treatment 15% (0% for taxpayers in the 10 and 15 percent income tax brackets ) for 2 years, through Dec.-31-2012.

2. Individual Income Tax Rates

Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA): it is scheduled to revert income tax rate from 10%, 15%, 25%, 28%, 33%, 35% to 15%, 28%, 31%, 36%, and 39.6%.

Tax Relief Act: it extends all individual rates at 10%, 15%, 25%, 28%, 33%, 35% for 2 years, through Dec.-31-2012.

3. Alternative Minimum Tax

AMT patch--Exemption amounts for 2010 and 2011 with/and without a patch:

	2010	2011
Single individuals	47,450/33,750	48,450/33,750
Married couples filing jointly	72,450/45,000	74,450/45,000
Married couples filing separately	36,225/22,500	37,225/22,500

4. Payroll Taxes

Social Security Tax on all wages up to 106,800	Old	New
Employee	6.2%	4.2%
Self-employed individual	12.4%	10.4%

Tax Relief Act also extend some tax benefits related to the following issues for 2 more years, through Dec.-31-2012

• Enhancement on Child Tax Credit ($1,000)
• Enhancement on Adoption Credit
• Enhancement on Dependent Care Credit
• Enhancement on Earned Income Tax Credit
• Enhancement on Student loan interest deduction
• Enhancement on Coverdell Education Savings Accounts
• Full repeal of the Peace limitation
• Repeal of the Personal Exemption Phaseout
• EGTRRA's marriage penalty
• Employer-Provided Child Care Credit
• American Opportunity Tax Credit
• Educational Assistance Exclusion
• State and local sales tax deduction
• Higher education tuition deduction
• Teacher's classroom expense deduction
• Charitable contribution of IRA proceeds
• Scholarships exemption from National Health Service Corps Scholarship Program and the Armed Forces Scholarship Program
• Mortgage Insurance Premiums (extend 1 year subject to some limitations)

PSQ

Sources: http://tax.cchgroup.com/downloads/files/pdfs/legislation/bush-taxcuts.pdf