Know the Federal Tax Deductions and Limits for 2011?

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Rodney Fujita, CPA | Bader Martin, PSAs late as December, it appeared that 2011 would usher in big changes to the federal income, estate and gift tax rules.

Then Congress passed, and President Obama signed, the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (Tax Relief Act).

The Tax Relief Act extended a number of expired and expiring federal tax benefits and credits, reducing the number of federal tax changes for 2011. Most, but not all, of the federal inflation-adjusted tax amounts for this year are also unchanged.

Quick Reference Guide for 2011
The following guide includes many of the most important tax amounts for 2011, and compares them to the amounts applicable for 2010.



Social Security

2011

 2010

Social Security taxable wage base

$106,800

$106,800

Employee portion of Social Security tax

4.2%

6.2%

Self-employed Social Security tax

10.4%

12.4%

Medicare tax

1.45%

1.45%

Medicare taxable wage base

No limit

No limit

Individual Retirement Accounts

2011

2010

Individual IRA, up to 100% of earned income (combined limit for traditional and/or Roth)

$5,000

$5,000

Additional annual catch-up contributions for account owners age 50 and older (Roth and traditional IRA)

$1,000

$1,000

Annual Qualified Plan Limits

2011

2010

Maximum compensation used to determine contributions

$245,000

$245,000

Deferral limits for plans

    §401(k)

    SIMPLE

    §403(b)

    §457


$16,500

$11,500

$16,500

$16,500


$16,500

$11,500

$16,500

$16,500

Additional catch-up contributions for employees, age 50 and older

    §401(k)

    SIMPLE

    §403(b)

    §457


$5,500

$2,500

$5,500

$5,500


$5,500

$2,500

$5,500

$5,500

Highly Compensated Employee threshold

$110,000

$110,000

Compensation defining Key Employee in top‑heavy plan

$160,000

$160,000

Compensation triggering Simplified Employee Pension (SEP) contribution requirement 

$550

$550

Maximum annual addition for Defined Contribution Plan

$49,000

$49,000

Maximum annual benefit for Defined Benefit Plan

$195,000

$195,000

Standard Deduction

2011

2010

Married filing jointly and surviving spouse

$11,600

$11,400

Single and married filing separately

$5,800

$5,700

Head of household

$8,500

$8,400

AMT Exemption Amounts

2011

2010

Married filing jointly and surviving spouse

$74,450

$72,450

Single

$48,450

$47,450

Married filing separately

$37,225

$36,225

AGI for Limit on Certain Itemized Deductions

2011

2010

All filing status categories

N/A

N/A

Personal Exemption

2011

2010

Amount

$3,700

$3,650

Personal Exemption Phase-Out

2011

2010

Phase-Out Begins (adjusted gross income)

N/A

N/A

Fully Phased Out (adjusted gross income)

N/A

N/A

Driving Deductions, Per Mile

2011

2010

Business mileage
     January 1 – June 30
     July 1 – December 31

 
51.0¢
55.5¢

 
50.0¢
50.0¢

Charitable mileage

14.0¢

14.0¢

Medical and moving mileage  
     January 1 – June 30
     July 1 – December 31

 
19.0¢
23.5¢

 
16.5¢
16.5¢

Business Equipment

2011

2010

Maximum Section 179 expense deduction

$500,000

$500,000

Phase-Out for Section 179, based on asset additions

$2 million

$2 million

Qualified Transportation Fringe Benefit Exclusion

2011

2010

Commuter highway vehicle and transit pass, per month

$230

$230

Qualified parking, per month

$230

$230

Domestic Employees

2011

2010

Annual threshold when a domestic employer is liable to withhold and pay FICA for babysitters, housekeepers, etc.

$1,700

$1,700

Kiddie Tax

2011

2010

For an under-age-19 child (or a full-time student under the age of 24), the net unearned income that is not subject to the “kiddie tax”

$1,900

$1,900

Tax Credits

2011

2010

Maximum Making Work Pay credit (married, filing joint return)

N/A

$800

Maximum Homebuyer’s credit

     First-time homebuyers

     Certain existing homeowners


N/A

N/A


$8,000

$6,500

Maximum American Opportunity Education credit

$2,500

$2,500

Energy credit for qualifying energy-efficient improvements to existing homes (subject to certain limitations)

30%

30%

Federal Estate Tax

2011

2010 *

Maximum tax rate

35%

N/A

Exemption amount, per decedent

$5 million

N/A

Gift Tax

2011

2010

Annual amount, per recipient (without filing a gift tax return or reducing the lifetime gifting exemption amount)

$13,000

$13,000

Lifetime gifting exemption

$5 million

$1 million


 _______________

* Estates can optionally elect to adopt the 2011 tax rates and exemption amounts for 2010.

About Rodney K. Fujita

Rod Fujita is a principal in Bader Martin's tax practice and is a member of its high net worth and family business practice groups. He serves as the firm's Director of Tax Services.
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