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 Payroll Changes for 2011 - For wages paid in 2011, the employee portion of the OASDI tax rate is reduced from 6.2% to 4.2%. The employer matching portion remains at 6.2%. Both employee and employer will continue to pay the 1.45% Medicare tax and match.
- The Making Work Pay credit expired on December 31, 2010
- The COBRA premium assistance credit which applies to premiums paid for employees involuntarily terminated between September 1, 2008 and May 31, 2010 has been extended.
- Employees no longer have the option of receiving advance payroll payments of the earned income tax credit (EIC). Eligible individuals will still be able to claim the credit on their 2011 returns.
- Employers must use electronic methods for paying federal payroll taxes. Payroll taxes may not be paid using federal tax deposit coupons beginning January 1, 2011.
Other changes for 2011 This list is not intended to be all inclusive. Rather, it focuses on those law changes most likely to impact our individual clients directly. Please be sure to contact us with any questions you have regarding your particular tax situation. - 0% and 15% capital gains tax rates have been extended through 2012.
- 0% and 15% rates on qualified dividend income for noncorporate taxpayers have been extended through 2012.
- 100% gain exclusion for qualified small business stock is extended through 2011.
- Exclusion of qualified dividend income from investment income is extended through 2012.
- 10%, 15%, 25%, 31%, 33%, and 35% marginal tax rates have been extended through 2012.
- Bakup withholding rate on reportable payments remains at 28%.
- Voluntary withholding on unemployment benefits remains at 10%.
- $1,000 per child and expanded refundability of the child tax credit are extended through 2012.
- Nonbusiness energy property credit is extended through 2011.
- Windows, skylights, and doors can qualify for nonbusiness energy property credit by meeting Energy Star standards.
- Efficiency standards for furnaces, boilers, and stoves are tightened for nonbusiness energy property credit.
- Personal exemption phaseout will not apply until after 2012.
- Overall limitation on itemized deductions will not apply until after 2012.
- Interest deduction for mortgage insurance premiums is extended through 2011.
- $250 above-the-line deduction for teacher's out-of-pocket classroom related expenses is retroactively extended through 2011.
- Ability to allow tax-free IRA distributions of up to $100,000 if donated to charity is retroactively extended through 2011.
- American Opportunity Tax Credit for higher education is extended through 2012.
- Qualified tuition deduction is retroactively extended through 2011.
- Exclusion for employer-provided educational assistance and restoration of the exclusion for graduate-level courses is extended through 2012.
- EGTRRA changes to the student loan interest deduction are extended through 2012.
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