What’s New for Tax Year 2011 (When Filing in 2012)

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The following are select tax topics affecting individuals and businesses for tax year 2011. Some of the provisions, implemented in prior years, continue as noted below.

Individuals

Itemized Deductions: The limitation on itemized deductions has been repealed, and deductions can be fully utilized without adjusted gross income (AGI) limitations. Limitation is scheduled to return in 2013.

Personal Exemptions: AGI phase-out rules continue to be inapplicable for personal exemptions. The personal exemption is $3,700 for 2011, an increase of $50. Phase-out based on AGI is scheduled to return in 2013.

Alternative Minimum Tax (AMT): Exemption increased to $48,450 for single taxpayers, $74,450 for joint filers and $37,225 if married and filing separately.

Reduced Tax Rates Continue: 2011 tax rates for individuals remain at 10 percent, 15 percent, 25 percent, 28 percent, 33 percent and 35 percent.

Payroll Tax Holiday: Reduced employee share of Social Security taxes under the Federal Insurance Contributions Act (FICA) reduced from 6.2 percent to 4.2 percent. This reduction in FICA also applies to the self-employment tax, reducing the rate from 15.3 percent to 13.3 percent. This provision is currently set to expire at the end of February 2012.

Please see full alert below for more information.

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Published In: Business Organization Updates, Tax Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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