New Federal Income Tax Laws
Both federal and state income tax laws change every year. Some tax programs are initiated with planned expirations, and other items like the income tax rates are changed every year to ostensibly adjust to the national economic climate. The new federal income tax lawscan be quite confusing to keep up with because many of them are created for many different reasons.
One of the most basic things you can check is the amount of the standard deduction for tax payers for the current tax year. For 2011 married couples filing jointly can take $11,900. Single people and those filing separately can take $5,950, and $ 8,700 for qualified head of the household.
Lets take a look at some of the anticipated new federal income tax laws and tax credits and deductions.
The federal estate tax will move on with its new five million dollar exemption with a maximum rate of 35%. It was not always five million dollars mind you, and these rates are set to expire after 2012.
Also continuing into 2012 will be the lowered tax rates on long term capital gains.
The child tax credit is still doing it what it does.
Higher contributions are allowed for your 401k and IRA.
The student loan interest deduction is still in play.
The mileage deduction has actually decreased by 2.5 cents.
The gift tax exclusion has increased by $1,000.
The American opportunity tax credit is still rolling strong.
A temporary increase in the earned income tax credit for those with three children or more.
2011 is the last tax year for the special itemized deduction of mortgage insurance premiums.
The piss-poor 30% energy tax credit is gone after 2011.
Beginning in 2013, debt forgiven in connection with the foreclosure of a principal will once again be recognized as taxable income.
There are many more new federal income tax laws that are still fair play for the tax year of 2011. If you use an online tax service like TurboTax then you’ll actually have a hard time missing anything. The software works on the basis of asking you multiple series of questions that insure it knows what you do and don’t qualify for. In fact, their “biggest refund guarantee” has never been contested.
If you’re not planning on actually using them as a filing service, you can still browse their website for general information about tax law changes for the current and future years.