January 2011
Dear Clients and Friends:
2011 Selected rate changes
Each year the Internal Revenue Service makes inflationary adjustments to various tax rates and deductions. Following are the changes we are most often asked about:
|
Item |
2010 |
2011 |
Change |
|
Estate tax exclusion |
N/A |
$5,000,000 |
|
|
Annual gift tax exclusion |
$13,000 |
$13,000 |
|
|
Standard mileage rate for business |
$0.50 |
$0.51 |
$0.01 |
|
Charitable mileage rate |
$0.14 |
$0.14 |
|
|
Social Security earnings limit age 62 to calendar year before turning 65 & 10 months |
$14,160 |
$14,160 |
|
|
Social Security earnings limit in calendar year you turn 65 & 10 months |
$37,680 |
$37,680 |
|
|
Maximum 401K |
$16,500 |
$16,500 |
|
|
Maximum 401K if 50 yrs or older |
$22,000 |
$22,000 |
|
|
Maximum IRA |
$5,000 |
$5,000 |
|
|
Maximum IRA if 50 yrs or over |
$6,000 |
$6,000 |
|
|
Maximum SEPIRA |
$49,000 |
$49,000 |
|
|
Expensing of business equipment except vehicles |
$500,000 |
$500,000 |
|
|
FICA Rate |
6.2% |
4.2% |
-2.0% |
|
Employer FICA match |
6.2% |
6.2% |
|
|
FICA wage limit |
$106,800 |
$106,800 |
|
|
SDI rate |
1.1% |
1.2% |
0.1% |
|
SDI wage limit |
$93,316 |
$93,316 |
|
|
Maximum HSA for single plan |
$3,000 |
$3,050 |
$50 |
|
Maximum HSA for family plan |
$5,950 |
$6,150 |
$200 |
|
HSA catch up (over 55 years old) |
$1,000 |
$1,000 |
|
If you have a question about a change not on our list, please call.
2010 Use tax report due April 18, 2011
If you are in business and have gross receipts of over $100,000 you should be registered with the State Board of Equalization (SBOE) as a qualified purchaser and should have filed a 2009 use tax return. Once registered, you are required to file a use tax return annually by April 15th. However, after the initial notification by the SBOE, all future reminder notices will be sent to you only via email. When you registered you were assigned an account number and an express log in number. If you do not have these, call (800)400-7115 and get them from the state board of equalization. You can e-file your 2010 return at http://www.boe.ca.gov/elecsrv/efiling/sutd.htm. Call us if you need help.
Medicare premiums
For 2011, if you are a senior who is considered a “high income individual”, you may see a decrease in your social security check because you are required to pay a surcharge on Medicare Part B premium. If your 2009 tax return reported an unusually high gross income amount due to a onetime event such as the sale of property, you can file Form SSA-44 to appeal the higher premium.
The following table shows the 2011 monthly premiums for a single person based on the 2009 tax return. For a married couple, double the income amounts.
|
Income over |
Not over |
Variable premium |
Total monthly premium |
Annual premium |
|
0 |
85,000 |
0 |
115.40 |
1,384.80 |
|
85,000 |
107,000 |
46.10 |
161.50 |
1,938.00 |
|
107,000 |
160,000 |
115.30 |
230.70 |
2,768.40 |
|
160,000 |
213,000 |
184.50 |
299.90 |
3,598.80 |
|
213,000 |
No limit |
253.70 |
369.10 |
4,429.20 |
Federal tax deposit coupons have been eliminated
You can no longer pay employment taxes at your bank. Electronic Federal Tax Payment System is required. The only exception is if the total tax on your quarterly return is less than $2,500. In that case, you can send a check with the return.
You can learn more and make payments at www.eftps.gov.
A little more about the new estate tax rules
The amount that passes free of estate tax is now $5,000,000. Furthermore, if the executor for your predeceased spouse (who died after 2010) makes the election on his or her estate tax return, any unused amount ($5,000,000 less the taxable estate of your spouse) is added to your $5,000,000.
Sounds good but:
1. In order to make the election, a federal estate tax return would have to be filed and without the election, no return would be necessary.
2. These rules are only in effect through 2012 when congress will have to deal with this again.
Reminder for IRA owners
If you have required minimum distributions and plan to make charitable contributions in 2011, consider making direct transfers from your IRA to charity. The amounts transferred go against (reduce) the required minimum distribution.
Please call us if you have any questions about the issues and facts we raised or about any other tax, business or financial planning issue.
~Your partners in financial success~
~Visit our website at www.morrecpa.com~
