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The Tax Cut Deal At A Glance

December 7, 2010

Yesterday Obama and the Republican leaders in Congress reached an agreement to extend the expiring income tax cuts for two years, extend unemployment benefits and cut millions of workers pay in Social Security payroll taxes. Obama said  “I’m not willing to let working families across this country become collateral damage for political warfare.” He went on to say that letting the cuts expire would be a “chilling prospect for the American people.”  Here is a the tax cut deal at a glance:

  • Extended Bush-era tax cuts for all income groups through 2012.
  • Extend unemployment benefits for 13 months. Note that without this agreement, 7 million workers would have lost benefits in the coming year.
  • Include a 2-percentage-point cut in employees’ Social Security payroll taxes in 2011.
  • Keep the Earned Income Tax Credit.
  • Keep the Child Tax Credit.
  • Keep the American Opportunity Credit.
  • Set the Estate Tax at 35% for two years on assets of $5 million or more. Note the threshold for estate taxes last year was $3.5 million and the rate was 45%.
  • Allow business to completely write off 100% of their capital purchases next year.

It’s a great time to take a look at your year-end tax planning and see how this will impact your tax scenario. Give us a call at 212-979-6830 or stop by for a visit as GAI (www.gunwel.com) is here to help with all of your income tax needs. See you soon!

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