Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010
Enacted December 17, 2010
The following tax elements have been extended through December 31, 2012:
- All individual income tax rates in the following tax brackets; 10, 15, 25, 28, 33, and 35 percent.
- Lower capital gains tax rates of 15 and zero percent
- Qualified dividends continue to be eligible for the reduced capital gains rates.
- 100% exclusion of gain realized on small business stock acquired after September 27, 2010 and before January 1, 2012 and held for more than five years.
- Itemized deduction phase-out for upper income earners is fully repealed for 2010 thru 2012.
- Personal exemption phase-out for upper income earners is fully repealed for 2010 thru 2012.
- Marriage penalty relief (doubling of the standard deduction for MFJ and doubling of the 15% tax bracket).
- The $1,000 per Child credit.
- Earned Income tax credit.
- Adoption credit of $11,000 (adjusted for inflation), refundable 2010 thru 2012.
- Dependent Care credit, $3,000 eligible expenses per child, maximum credit of 35%.
- Employer provided child care facilities that are eligible for a tax credit
- Certain premiums on qualified mortgage insurance are deductible through December 2011.
- American Opportunity Tax credit (formerly the Hope Education Credit).
- Education Assistance Exclusion, up to $5,250 of employer provided assistance annually.
- Student Loan Interest deduction up to $2,500.
- Coverdell Education Savings Account contributions up to $2,000 per child, eligible expenses include elementary and secondary school expenses in addition to post secondary expenses.
- National Health Service Corps Scholarship Program and the Armed Forces Scholarship program are qualified scholarships excludable from income through 2012.
- State and local sales tax deduction for individuals.
- Higher education tuition deduction.
- Teacher’s classroom expense deduction.
- Charitable contribution of IRA proceeds up to $100,000.
- Charitable contribution of appreciated property for conservation purposes.
- Alternative Minimum Tax (AMT) patch for 2010 and 2011.
- Reduction in the OASDI portion of Social Security taxes from 6.2% to 4.2% for wages earned in 2011 up to $106,800. Note, the employer matching portion remains at 6.2%.
- 100% Bonus Depreciation for qualified investments made after September 8, 2010 and before January 1, 2012, and 50% Bonus Depreciation after 2011 and before 2013.
- Refundable credits (research and minimum tax credits) in lieu of claiming depreciation extended.
- Section 179 expensing currently at $500,000 for 2010 and 2011, set at $125,000 for 2012.
- Research Credit has been renewed for 2010 and 2011.
- Transit Benefits from March 2009 through December 31, 2011 remain a tax-free fringe benefit.
- Work Opportunity Tax Credit of 40% of up to $6,000 of qualified first-year wages for individuals who begin employment before January 1, 2012.
- Various Business Tax Extenders.
- Various Energy Incentives extended.
- Individual Energy Credits extended for 2011, but at pre 2009 parameters.
- Certain targeted disaster relief measures extended for one or two years.
- Several Bond Programs extended.
- Certain charitable deduction incentives extended through 2011 (contributions of food inventory, contributions of books to public schools, corporate contributions of computer equipment for educational purposes, basis adjustment to stock of an S-Corp making charitable contributions)
- Estate Tax exemption of $5 million, with a maximum rate of 35%.
- Estates: Modified carryover basis rules eliminated and stepped up basis rules restored.
- For deaths in 2010, option to elect modified carryover basis rules, or restored stepped up basis rules.
- Portability of estate tax applicable exclusion amount between spouses, after 2010 and before 2013
- State death tax credit revived (replaces deduction) for decedents dying during 2011 and 2012.
- Gift Tax is reunified with the estate tax with a top gift tax rate of 35% and an applicable exclusion amount of $5 million.
- Generation Skipping Tax rate of 35% (2011 and 2012 only) for transfers after 2010.
Note: This is not a complete list of all the provisions in the Act. Please give us a call to discuss an item in greater depth or to inquire about an item not on this list.
Disclaimer: This document represents a general overview of recent tax developments and should not be relied upon without an independent, professional analysis of how any of these provisions may apply to your specific situation. Any tax information contained in the body of this narrative was not intended or written to be used, and cannot be used, by the recipient for the purposes of avoiding penalties that may be imposed under the Internal Revenue Code or provisions of applicable state or local law.