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Tax Updates!

January 3, 2011

Personal exemptions and standard deductions for tax year 2011 were released by the IRS. These inflation adjustments relate to eight tax provisions that were either modified or extended by the Tax Relief Act. Some of the adjustments include:

  • The value of each personal and dependent exemption available to most taxpayers is $3,700, a $50 increase from 2010.
  • The new standard deduction is $11,600 for married couples filing a joint return, a $200 increase; $5,800 for singles and married individuals filing separately, a $100 increase; and $8,500 for heads of household, a $100 increase. The additional standard deduction for blind people and senior citizens is $1,150 for married individuals and $1,450 for singles and heads of households, each an increase of $50. Nearly two out of three taxpayers take the standard deduction, rather than itemizing deductions, such as mortgage interest, charitable contributions and state and local taxes.
  • Tax-bracket thresholds increase for each filing status. For a married couple filing a joint return, for example, the taxable-income threshold separating the 15-percent bracket from the 25-percent bracket is $69,000, up from $68,000 in 2010.
  • The maximum earned income tax credit (EITC) for low and moderate income workers and working families rises to $5,751, up from $5,666 in 2010. The maximum income limit for the EITC rises to $49,078, up from $48,362 in 2010. The credit varies by family size, filing status and other factors, with the maximum credit going to joint filers with three or more qualifying children.
  • The modified adjusted gross income threshold at which the lifetime learning credit begins to phase out is $102,000 for joint filers, up from $100,000, and $51,000 for singles and heads of household, up from $50,000.

Our ongoing promise to you, is to keep you up to date with all tax law changes and updates. Give GAI (http://www.gunwel.com/) a call at 212-979-6830 or stop by for a visit as it is the beginning of the year and getting a jump on your tax scenario can always be helpful. See you soon!

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