Tax Law Update

Quick Facts for 2010 Individual Income Tax Returns

Maximum Tax rate on Qualified Dividends and Net Capital Gain is 15%
Minimum Earned Income for Additional Child Tax Credit is $3,000
Adoption Benefits Increased to $13,170
For 2010, there is a n education credit called the American opportunity tax credit (AOC). This is a modification of the Hope Credit.
General sales tax is still deductible as an itemized deduction for 2010 and 2011
No phase out limitations for itemized deduction or personal exemptions

Annual gift tax exclusion amount is $13,000 per donee
Estates over $5 million will be taxed and the assets will receive a stepped-up basis. The personal representative for a decedent who dies during 2010 can elect to have no estate taxes and the assets to have a modified carryover basis.
An estate tax return for a U.S. citizen or resident needs to be filed only if the gross estate exceeds $5 million for decedents dying during 2011
The maximum estate and gift tax rate for 2010 through 2012 is 35%

The Section 179 deduction for qualified asset purchases is $500,000 for 2010 and 2011
Bonus depreciation for rates new qualified property acquired and placed in service are as follows:
- 1/1/10 – 9/8/10 are 50%
- 9/9/10 – 12/31/11 are 100%
100% of health insurance premiums paid by the self-employed can be deducted 'above-the-line', if on their W-2 form
The standard mileage rate for business vehicles is 50 cents per mile for 2010 and 51 cents for 2011
Meal Expenses when subject to “Hours of Service” limits are 80% deductible
The maximum amount of wages subject to the social security tax is $106,800 or 2010 and 2011. No limit on wages subject to Medicare tax
The OASDI rate on amounts withheld from employees wages is reduced from 6.2% to 4.2% for 2011. The employer portion remains at 6.2%.
The OASDI portion of self-employment tax is reduced from 12.4% to 10.4%