The Individual Investor’s Guide to Personal Tax Planning 2011
This year’s tax guide brings both good news and bad news. The good news is that tax rates, deductions and exemptions are mostly unchanged from last year. The bad news is that some key items are uncertain for 2012.
As of press time, Congress has yet to pass legislation extending the payroll tax cut, the deduction for state sales taxes or higher alternative minimum tax exemptions into 2012. Social Security taxes for employees will revert back to 6.2% of salaries in 2012 from the reduced 4.2% rate charged this year. The deduction for state sales taxes is also slated to expire on December 31, 2011. Exemptions for the alternative minimum tax will revert back to pre-2011 levels next year without new legislation.
Potentially complicating matters more is the Congressional Super Committee. The bipartisan committee had a November 23 deadline for reaching an agreement on how to reduce the U.S. federal deficit. At press time (November 22), the committee has failed to reach a compromise agreement. It is likely that taxes will become a campaign issue, resulting in eventual changes to rates, deductions and exemptions.
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