New Tax Laws & Changes
· Annual gift tax exclusion remains at $13,000 per individual per year
· Starting in 2011, brokers will be required to report cost basis of securities in addition to already reporting net proceeds on sale
· Capital gain/dividend income remain at maximum 15% income tax rate into 2011 – 0% for individuals in the 15% or lower federal income tax bracket
· Maximum 401(K) employee contribution remains at $16,500 (plus $5,500 for catch-up contributions for those over 50 years old) for 2010 and 2011
· Required Minimum Distributions “RMDs” must resume in 2010 for those age 70 ½ or older – Didn’t have to make RMD distribution in 2009 because of falling stock market
· The $400 ($800 if married filing jointly) Making Work Pay Credit will expire
· The Social Security payroll tax rate will decrease by 2%, as will Self-Employment Tax for self-employed taxpayers
· The estate tax will return with a rate of 35% and a lifetime exclusion for $5 million for 2011 and 2012
Small Business Jobs Act of 2010
· Signed September 27, 2010
· Cell phones removed from stringent record keeping and deduction standards
· Self-employed individuals health insurance can reduce taxable business income – 2010
· §179 – First year expensing for purchases of equipment up to $500,000 – 2010 and 2011
· 50% Bonus depreciation on other eligible assets less than year 20-year life – 2010 only
· Bonus depreciation applies to qualified rental and retail leasehold improvements
· Penalties increased from $15 to $30 for each Form 1099 not reported
· Annuitization permitted on only a portion of an annuity, endowment or life insurance contract which are not in IRAs or retirement plans
· Permits pre-tax employer-sponsored retirement plan balances to convert into Roth accounts
· Increases the deduction for business start-up expenses from $5,000 to $10,000
