April 2011

What does the new tax law mean to you?

Thursday, April 07, 2011

It started as a straightforward decision to either extend the existing tax framework that has been in place since 2003 or revert back to the schedule that was in place prior to that. Existing law called for the latter, which in practical terms would have meant a tax increase for everybody above the 15% tax bracket. It ended with the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010.

The obvious implication of this act for taxpayers is that federal income tax rates will remain where they were in 2010, so that expenses will not increase without a corresponding increase in income. The other key provision of the act that affects everybody is that we will pay 4.2% for Social Security taxes in 2011, rather than the 6.2% we've been paying. The maximum taxable income for Social Security in both 2010 and 2011 is $106,800. Taxpayers earning that much or more will pay $4,485.60 in 2011, which is $2,136 less than the $6,621.60 they paid in 2010.

Some other changes that impact individual taxpayers include:

A 13-month extension of federal unemployment benefits. This is having a dramatic impact for individuals who were otherwise facing the end of unemployment benefits.
An extension of the Earned Income Tax Credit for two years. This is a tax credit that can range up to several thousand dollars for working, low-income families.
The Energy Tax Credit has been extended through the end of 2011, although it's not as attractive as it was in 2010. The maximum benefit is now $200 for qualified, energy-efficient windows and $300 for doors, and is based on 10% of the purchase price. Furthermore, if you claimed $500 or more last year, you're out of luck this year.
The American Opportunity Credit has been extended for two years. Assuming income limits are not exceeded, the first $2,000 of tuition can be claimed as a credit against your federal tax liability, as can 25% of the next $2,000. In effect, this extension is good for $5,000 in your pocket over the next two years, if you qualify.
According to the White House, the extension of the Child Tax Credit will benefit 10.5 million lower-income families with 18 million children. This provision allows for a credit of up to $1,000 per child, maxing out at $3,000. The full credit is available to taxpayers who are married filing jointly with an adjusted gross income up to $110,000, and $75,000 for other taxpayers.
The Clinton-era Estate Tax rate of 55% with a $1 million exclusion was due to return for 2011. The compromise that produced the most recent tax Act created a 35% rate with an exclusion amount of $5 million. This is valid for 2011 and 2012.

Tags: tax relief, unemployment insurance reauthorization, job creation act of 2010

Taxes

Foothills Financial Planning has moved

Wednesday, April 06, 2011

For the third time in three years, our primary office address in Ahwatukee has changed. That’s probably not entirely unusual for a small business. Maybe a little more peculiar is the fact that the three offices are within about 150 feet of each other. Despite appearances to the contrary, I’m not a passive-aggressive mover, whatever that may be.

Our first move was within the same building, in a quest for a bit more space. I got a little more adventurous in this latest move and actually changed buildings…going from Building 4 to Building 5 within our little corner of the world. While I was not particularly unhappy with the former office, the amenities and additional conference room options in our new location made the change worth the effort.

Our new address is 4425 E. Agave Road, Suite 122, Phoenix, AZ 85044. Our previous phone numbers will still reach us, but the new office number is (480) 398-2694. We're excited to be here!

Please visit our Contact page for more detailed information. Note that our Scottsdale address has not changed.

Tags: ahwatukee

General