|
This is my final update on the scheduled tax breaks that are expected to expire by this year’s end unless congress does something to re-instate them. Now that the elections are over with, I’m hopeful that our Congress will take to the task of looking at these expiring tax breaks before they become extinct.
These “Sunset Rules” will impact all taxpayers~the rich, middle class and poor. All politics aside, I would suggest that you call your senators and urge them to re-consider enacting all or some of these tax breaks. Not doing so could place a heavier tax burden on the backs of struggling americans. I think most of us would agree that times are already financially tough enough without taking on a heavier tax bill.
I will keep you updated on any changes made in Washington, but for now here are some more changes you can expect if the “Sunset Rules” are allowed to expire:
- Health Savings Accounts – The penalty for a nonqualified distribution from an HSA has been increased from 10% to 20% and distribution for over-the-counter medication is no longer a qualified distribution.
- Higher Education Interest Deduction – This deduction will phase-out for joint filing taxpayers beginning at an AGI of $60,000 (down from $120,000 in 2010). The phase-out for an unmarried taxpayer remains the same. In addition, the deduction is limited to interest paid on the first 60 months (was previously unlimited) in which interest payments are required. This will impact higher-income joint filers and taxpayers who have already exceeded the 60-month limitation.
- Estate Tax – The estate tax, which was eliminated for 2010, returns in 2011 with an exemption of $1 million dollars (down from $3.5 million in 2009), and a maximum tax rate of 55%, up from 45%.
- On top of all these changes, there are the Health Care provisions that are taking effect in 2013, including the following: increasing the medical deduction floor to 10% for most individuals (up from 7.5%), adding a 3.8% unearned income surtax to high-income taxpayers, and tacking on an additional .9% to the current 1.45% hospitalization insurance (HI) portions of the FICA withholding (or the SE tax in case of self-employed individuals). The surtax and additional HI withholding apply to incomes in excess of $250,000 for married joint filers, $125,000 for married individuals filing separately and $200,000 for others.
E-File Florida is very happy to help you with questions regarding these “Sunset Rules”. Feel free to contact our office by calling 954-583-8534 or by email at info@efileflorida.com. You can also visit us on the Internet at http://www.efileflorida.com for more great tax tips and articles.
|
BetweenDeathandTaxes' Blog 