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What Tax Provisions Apply? A Quick Summary
The following chart provides a summary of the rules for key tax topics for tax years 2009, 2010, and 2011.
Tax rates
|
2009 |
2010 |
2011 |
| Federal income tax brackets |
6 brackets: 10%, 15%, 25%, 28%, 33%, 35% |
6 brackets: 10%, 15%, 25%, 28%, 33%, 35% |
5 brackets: 15%, 28%, 31%, 36%, 39.6% |
| Maximum tax rate on long-term capital gains |
15% (0% for individuals in the 10% or 15% tax brackets) |
15% (0% for individuals in the 10% or 15% tax brackets) |
20% (10% for individuals in the 15% tax bracket)1 |
| Tax on qualifying dividends |
15% (0% for individuals in the 10% or 15% tax brackets) |
15% (0% for individuals in the 10% or 15% tax brackets) |
Taxed as ordinary income |
| Alternative minimum tax (AMT) |
Exemption amounts:$70,950 (married joint)
$46,700 (single)
$35,475 (married separate)Personal tax credits allowed against AMT |
Exemption amounts:$45,000 (married joint)
$33,750 (single)
$22,500 (married separate)Personal tax credits generally not allowed against AMT |
Exemption amounts:$45,000 (married joint)
$33,750 (single)
$22,500 (married separate)Personal tax credits generally not allowed against AMT |
1 Slightly lower rates apply to qualifying property held for 5 or more years.
Tax credits
|
2009 |
2010 |
2011 |
| Making Work Pay tax credit |
Refundable credit equal to the lesser of 6.2% of an individual's earned income or $400 ($800 for married couples filing joint returns); phased out for higher incomes |
Refundable credit equal to the lesser of 6.2% of an individual's earned income or $400 ($800 for married couples filing joint returns); phased out for higher incomes |
N/A |
| Earned income tax credit |
Increased 45% credit percentage for families with 3 or more qualifying children; increased phaseout amounts for married couples filing joint returns |
Increased 45% credit percentage for families with 3 or more qualifying children; increased phaseout amounts for married couples filing joint returns |
Increased percentage and phaseout amounts do not apply |
| American Opportunity tax credit (Hope tax credit) |
Generally, a credit for up to $2,500 of a student's qualified tuition and related expenses for each of the first 4 years of post-secondary education; up to 40% of credit is refundable |
Generally, a credit for up to $2,500 of a student's qualified tuition and related expenses for each of the first 4 years of post-secondary education; up to 40% of credit is refundable |
Generally, a credit for up to $1,800 (figure could be higher for 2011 based on inflation adjustment) for first 2 years of postsecondary education; no portion refundable; phased out for higher incomes (phaseout ranges are significantly lower than 2009 and 2010 levels) |
| Child tax credit |
$1,000 maximum per child; refundable to the extent of 15% of earned income in excess of $3,000 |
$1,000 maximum per child; refundable to the extent of 15% of earned income in excess of $3,000 |
$500 maximum per child; separate, limited rules apply in determining if portion of credit is refundable |
Deductions
|
2009 |
2010 |
2011 |
| Deduction for teacher classroom expenses |
$250 above-the-line deduction available |
N/A |
N/A |
| Deduction for qualified higher-education expenses |
Maximum $4,000 deduction, phased out for individuals with higher income |
N/A |
N/A |
| Deduction for state and local sales tax |
Itemized deduction for state and local sales tax can be claimed in lieu of the itemized deduction for state and local income taxes |
N/A |
N/A |
| Additional standard deduction for real estate property taxes |
Individuals who do not itemize are able to claim an additional standard deduction of up to $500 ($1,000 if married filing jointly) for real estate property taxes |
N/A |
N/A |
| Itemized deductions |
Phased out for individuals with AGI exceeding $166,800 ($83,400 if married filing separately) 2 |
Not phased out at higher incomes |
Phased out for higher income individuals (AGI thresholds not yet available) |
| Personal and dependency exemptions |
Phased out for individuals with AGI exceeding $250,200 (married filing jointly), $208,500 (single), $125,100 (married filing separately)3 |
Not phased out at higher incomes |
Phased out for higher income individuals (AGI thresholds not yet available) |
| Definition of qualified education expenses (529 plans, Coverdell ESAs) |
Definition of qualified higher education expenses includes expenses for computers, equipment, software, and Internet access used while enrolled at an eligible educational institution |
Definition of qualified higher education expenses includes expenses for computers, equipment, software, and Internet access used while enrolled at an eligible educational institution |
Definition does not include expenses for computers, equipment, software, and Internet access |
| Mortgage insurance premiums |
Can be deducted as qualified residence interest; phased out for higher incomes |
Can be deducted as qualified residence interest; phased out for higher incomes |
Not deductible |
| Student loan interest deduction |
Student loan interest deductible (maximum $2,500), phased out for higher incomes |
Student loan interest deductible (maximum $2,500), phased out for higher incomes |
Deduction (maximum $2,500) limited to interest paid in first 60 months, phased out for higher incomes |
2 Itemized deductions are reduced by 3% of the excess of adjusted gross income (AGI) over the threshold amount. For 2009, only 1/3 of the calculated reduction is actually used to reduce itemized deductions. In 2011, the full amount of the calculated reduction will be applied.
3 The exemption amount allowed is reduced by 2% for each $2,500 ($1,250 for married filing separately) of AGI in excess of the threshold amounts. For 2009, only 1/3 of the calculated reduction is actually used to reduce the exemption amount allowed. In 2011, the full amount of the calculated reduction will be applied.
Business/self-employed individuals
|
2009 |
2010 |
2011 |
| "Bonus" depreciation |
50% additional first-year depreciation allowed |
50% additional first-year depreciation allowed |
No additional first-year depreciation |
| IRC Section 179 expensing |
$250,000 expense limit, reduced by amount by which cost of qualifying property placed in service during the year exceeds $800,000 |
$500,000 expense limit, reduced by amount by which cost of qualifying property placed in service during the year exceeds $2 million |
$500,000 expense limit, reduced by amount by which cost of qualifying property placed in service during the year exceeds $2 million |
Other
|
2009 |
2010 |
2011 |
| Charitable IRA distributions |
IRA holders over age 70½ able to exclude from income up to $100,000 in qualified distributions made to charitable organizations |
N/A |
N/A |
| Taxability of unemployment |
First $2,400 of unemployment compensation received excluded from income for federal income tax purposes |
N/A |
N/A |
| Coverdell education savings accounts |
$2,000 maximum annual contribution phased out for higher incomes |
$2,000 maximum annual contribution phased out for higher incomes |
$500 maximum annual contribution phased out for higher incomes (reduced phaseout range for married couples filing jointly) |
Copyright 2010, Forefield Inc.
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