You probably had to have been stuck in you car in a snowbank without cell service or a radio to not know that Congress passed the 2010 Tax Relief Act which will help keep our taxes down for a couple of years. The following is a letter that we sent out to all of our clients.
December 28, 2010
Client
Washington Finally Acts on Tax Cuts
By now you've heard that Washington finally extended the Bush tax cuts that were scheduled to expire on December 31. This means the top rate stays at 35% (rather than 39.6%) and the rate on capital gains and qualified corporate dividends stays capped at 15% (rather than 20%). But the new law keeps taxes down for everyone, not just the highest earners. If those Bush cuts hadn't been extended, the 10% rate would have disappeared, and tax brackets would have increased faster for everyone. So don't think that you get no benefit just because you aren't in those top brackets!
There's more good news, too. The law also cuts the employee portion of Social Security and self-employment taxes by 2% (for 2011 only), and, restores the estate tax, but with only a 35% rate applying on estates over $5.0 million. Finally, it extends a list of popular tax breaks that were scheduled to expire: (1) it "patches" the Alternative Minimum Tax for two more years, thus protecting millions of Americans from the AMT, (2) it extends the Child Tax Credit and American Opportunity Tax Credit (for college tuition), (3) it expands the Earned Income Tax Credit, (4) it extends bonus depreciation and first-year expensing for businesses, and, (5) it extends miscellaneous tax breaks for expenses like educator expenses, state and local sales taxes, and IRA distributions given directly to charity.
Now let's talk about what it all means. The reality is the law's provisions will last for two years at most. That means Washington will have to fight it out all over again -- with a divided Congress, in a Presidential election year -- with another $2 trillion or so added to the national debt (on top of the $13.9 trillion that's already there)! If the economy continues to pick up over the next two years, there may be enormous pressure to increase taxes. This will make tax planning even more important over this period. So if you don't yet have a plan, take action now! Call us, at 402.362.6636 or toll free at 800.975.4829
It is a pleasure serving you.
Kopsa Otte CPA's + Advisors
