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Increased Deductions Through Depreciation

The ability to write off the cost of assets versus having to depreciate them over time just got better.

 New Immediate Write Off Limits Are as Follows:

  •  2010 and 2011– you are allowed to write off $500,000 if you do not purchase new assets in total of more than $2 million


  • 2012 – the amount is decreasing this year to $125,000 available write-off with an new asset limit of $500,000


  • 2012 – the amount is decreasing this year to only $25,000 available write-off with an new asset limit of $200,000


  • You cannot take Idaho investment tax credit on these assets


  • The property can be new property or used property as long as it is new to you

More 2011 Tax Law Changes

 Here are some additional items of interest…

  •  Standard mileage rates for 2011 are as follows:  business $.51 per mile, medical and moving $.19 per mile, charitable $.14 per mile. 


  • You should see an increase to your 2011 paychecks. For the year 2011 the social security tax withheld from your paycheck will decrease from 6.2% tax to only 4.2% tax. 


  • IRS is still revising forms due to the recent tax law changes and will not be accepting e-filed tax returns for 2010 until February 14, 2011. 


  • The IRS is increasing its audits of taxpayers who claimed the first time home buyer and the existing home buyer credit on their tax return.  In 2011, there will be 200,000 returns audited relating to those credits. 


  • Tax brackets in 2011 and 2012 for married filing joint will be as follows:

 $0 – 17,000  10%

$17,000 – 69,000  15%

$69,000 – 139,350  25%

$139,350 – 212,300  28%

$212,300 – 379,150  33%

$379,150 and up  35%

Interesting IRS Facts


·         The IRS will never contact you via e-mail.  If the IRS contacts you by email you can be assured it is a “phishing” scam where unscrupulous people try to gather personal information by posing as the IRS.  If you receive an e-mail that appears to be from the IRS, do not answer it. 


·         The IRS has recently started training their revenue agents to be able to work with the QuickBooks 2010 software.  As a result, approximately 1,100 agents are now ready, willing and able to request your business records electronically.  We would never advise our clients to provide a QuickBooks backup to the IRS.


·         Sometimes it is easier and more beneficial for a third party Power of Attorney or CPA to correspond with the IRS on behalf of a taxpayer.  The IRS grants certain professional courtesies to CPA’s that the taxpayer themselves may not benefit from.  A CPA will have access to a different level of communication within the IRS that may not be available to taxpayers and as a result, communication is sometimes more efficient and effective. 


·         The federal government spends about $10 billion per year to pay the IRS’s 114,000 employees.


  • The IRS sends out an average 8 billion pages of paper every tax season. If all the pieces of paper were laid out end-to-end, it would wrap around the earth 28 times.

2011 Tax Law Changes

What 2011 Tax Law Changes Were Just Passed

Through the Tax Relief and Job Creation Act of 2010?

  • Tax rates will remain the same as 2010 for 2011 and 2012: 10, 15, 25, 28, 33, 35%
  •  Capital Gains rates will remain the same for 2011 and 2012:  0% and 15%
  •  Itemized deductions will be deductible in full for 2011 and 2012 – no phase-out
  •  Personal exemptions will be deductible in full for 2011 and 2012 – no phase-out
  •  Unemployment benefits extended for an additional 13 months
  •  Employees portion of  FICA (payroll) tax withholding will be reduced from 6.2% to 4.2% for 2011
  •  Child tax credit of $1,000 will remain in effect for 2011 and 2012
  •  Earned income credit treatment will continue to be consistent for 2011 and 2012
  •  American Opportunity Tax Credit (education credit) extended to 2011 and 2012
  •  Bonus depreciation of 100% in 2011 and 50% in 2012 with no limitation
  •  Estate tax rate will be 35% with a $5 million exclusion

Energy Efficiency Tax Credits

Take Advantage of Energy Efficiency Tax Credits

Did you know that if you purchase qualifying energy efficient products, you may be eligible for a federal tax credit up to $1,500?

• The federal home energy efficiency tax credit ends December 31st, 2010 for improvements made to your existing principal residence (rentals do not qualify).

• The following improvements may qualify if done at any time during 2010:

o Heating and Air Conditioning

o Insulation

o Roofs

o Water Heaters

o Windows and Doors

• If any of the above are nearing the end of their expected life, you may want to consider replacing them before the end of year to take advantage of the tax credits.

• According to Energy Star, the average home can reduce its energy costs by 30% or more with a few cost effective improvements.

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