2011 Tax Brackets, Rates and Federal Taxable Income Thresholds. Standard Deduction and Exemption Increase

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President Obama and Congress have approved a two year extension to all the Bush-era tax cuts. This means that the 2011 Federal IRS tax rates will be the same as 2010 rates, shown in the table below. However tax bracket ranges and standard deduction levels have increased slightly. A rise in tax rates would have cut the after-tax pay by $3,000 for the average tax payer, so the extension is worth a lot given current economic conditions. However, the extension is only for 2 years and unless the economy really tanks, don’t look for tax breaks to be extended again in 2013.

Update : See 2012 tax brackets and rates and 2013 tax rates that have now been published by the IRS.

2011 Federal IRS tax rates, brackets and income thresholds

2011 Tax Rates, Brackets and Income thresholds (Federal)

Notable changes between 2010 and 2011 Taxes:

- The value of each personal and dependent exemption, available to most taxpayers, is $3,700, up $50 from 2010.

- The new 2011 standard deduction is $11,600 for married couples filing a joint return, up $200, $5,800 for singles and married individuals filing separately, up $100, and $8,500 for heads of household, also up $100. The additional standard deduction for blind people and senior citizens is $1,150 for married individuals, up $50, and $1,450 for singles and heads of household, also up $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 increased slightly for each filing status as shown in the above table.

- See this article for key dates in 2012 to file your 2011 tax returns

I will continue to provide updated tax information when released by the IRS and encourage you to subscribe (free) via RSS, Email, Facebook or Twitter to get the latest news.

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[Previous Update- Sep 2010] With tax season complete, it is now time to look forward and implement some smart tax management strategies to reduce your mitigate your tax liability for the years ahead. This is particularly the case with a number of new provisions and expiring tax breaks in 2010 and 2011. Based on these and extrapolating from 2010 IRS Tax Brackets I have provided my preliminary view of the 2011 income tax brackets.

Higher Tax Rates with Repeal of Bush Era Tax Cuts

Beginning in 2011, tax rates that were in effect prior to 2001 and 2003 will be restored if President Obama does not extend the Bush tax cuts. These tax cuts included reductions in some individual income-tax rates, levies on capital gains and dividends, changes to the estate tax and relief from the so- called marriage penalty, in which a married couple may pay more in taxes than if they filed as separate individuals. The top income tax rate would go back to 39.6 percent, and the special low 10 percent bracket is eliminated.

Whether this actually happens will be a major point of contention in Congress especially in the contradictory light of the recession and record federal deficits. In all likelihood and based on stated views, it is likely that the Obama administration and Democratic lawmakers will extend income-tax cuts that benefit American families earning less than $250,000 a year, while allowing tax rate reductions for high-income earners to lapse. This means boosts in the top marginal rates from 33% and 35% to 36% and 39.6% respectively. Based on this and inflation, here is what the 2011 tax tables* could look like, with a comparison to the 2010 tax brackets. [SEE THE OFFICIAL IRS TAX TABLE and RATES IN THE LATEST UPDATE ABOVE]

2010 2011 Tax Rate Bracket Tables IRS

2010 vs. 2011 Federal Income Tax Rate Bracket Table

Some of the other key new and expiring tax provisions that you need to be aware of and mange include:

Increase in Capital Gains and Dividend Tax Rates – This is going to affect a number of Americans who saw their portfolio’s battered in 2008-2009. With the recovery in the last 6 months, it looks like Uncle Sam may come a calling for some of those stock market profits with tax rate reductions for long-term capital gains and dividends expiring this year. In 2011, the maximum long-term capital gains tax rate goes back up to 20 percent from 15 percent. A lower 10 percent tax rate is used by individuals who are in the 15 percent tax bracket. Their long-term capital gains had been tax-free since 2008. In 2011, dividend income (other than capital gain distributions from mutual funds) is taxed as ordinary income at your highest marginal tax rate.

Estate Tax Revived – For individuals dying after 2010, the federal estate tax returns with a $1,000,000 exemption and a 50 percent maximum rate. Congress is likely to take some action on these rules during 2010 with a likely exemption of at least $3.5 million, and it could be set as high as $5 million if the Senate prevails. Estate tax legislation will include spousal transfers, making the exemption $7 million or more for couples. The estate tax rate will be capped at 45%, the same as it is now. While there are likely to be more exemptions for the alternative minimum tax, there will be no repeal.

Child Tax Credit - The credit of $1,000 per eligible child reverts to $500 after 2010. After 2010, none of the child tax credit will be refundable to taxpayers unless their earned income is more than $12,550. This is one of the many Bush tax cuts currently scheduled to expire after 2010. Further temporary increases in the Earned Income Tax Credit for filers with three or more children and the higher income levels for the phaseout of the credit are repealed.

Despite a rising tax environment there are some ways to preparing for the upcoming income tax changes. Here are some smart tax strategies to consider:

- Maximize retirement-plan contributions. You should always consider your retirement accounts in any assessment of your tax strategy. When rates rise, tax-deductible contributions and tax-deferred investment growth can become more valuable. Although it’s true that tax deductions will be worth even more if tax rates move higher, there’s no need to postpone them; it still makes sense to continue making the maximum retirement-plan contribution each year. Self-employed taxpayers in particular can set aside substantial sums annually in Keogh or simplified employee pension (SEP) accounts, with contribution limits of $49,000 for 2009. Taxes on those funds will be deferred until they are withdrawn during retirement. 

- Consider Roth IRA Conversions – Starting in 2010, individuals with any amount of modified Adjusted Gross Income are free to switch a traditional IRA to a Roth IRA. Conversions are fully taxable at your regular tax rate. For conversions in 2010, taxpayers can spread the tax due over two years. Half the tax will be due in 2011, and the remaining half will be payable in 2012. Removing the limit on conversions effectively eliminates the income limit on contributions to Roth IRAs. A taxpayer with income too high to use a Roth will be able to contribute to a traditional IRA (which does not have income limits for contributions) and immediately convert to a Roth.

- Accelerate income; postpone deductions. Traditionally, the sensible move for most taxpayers has been to take deductions as soon as possible while seeking to delay some taxable income till the following year. However, you may want to consider reversing that formula, accelerating income into 2009 so that it may be taxed at lower rates. A similar strategy might be employed on the deduction side. If you were planning large charitable contributions in December, for example, you could postpone them a month on the premise that if tax rates rise, the value of philanthropic donations as a means of offsetting income will be greater.

- Making work pay tax cut relief (aka Payroll Tax Credit) – The Making work pay tax credit provides $400 for individuals and $800 for couples, phasing out completely at $190,000 for couples filing jointly and $95,000 for single filers. Because the credit is refundable (people can get it even if they owe no tax), most low-income workers will also qualify for the full credit. The average worker will see this tax credit in the form of a $10 and $20 pay rise per year based on their tax rate. Under the 10 year Obama budget, this credit is set to be extended to 2013. For more stimulus credits in 2010 and 2011 see this article.

It is unlikely that raising taxes alone will solve the massive debt and budget shortfalls. A study conducted at the Tax Policy Center found that Washington would have to raise taxes by almost 40 percent to reduce – not eliminate, just reduce – the deficit to 3 percent of our GDP, the 2015 goal the Obama administration set in its 2011 budget. That tax boost would mean the lowest income tax rate would jump from 10 to nearly 14 percent, and the top rate from 35 to 48 percent. What if we raised taxes only on families with couples making more than $250,000 a year and on individuals making more than $200,000? The top two income tax rates would have to more than double, with the top rate hitting almost 77 percent, to get the deficit down to 3 percent of GDP. Such dramatic tax increases are politically untenable and still wouldn’t come close to eliminating the deficit.

Still tax increases in some form or the other are inevitable and the best you can do is prepare for them when then come.

[Update - Jun 2010] Based on recent reports, it is looking more than likely that the tax brackets will remain the same for those earning less than $250,000. Based on this, here is an updated graphic with the possible tax changes next year.

Key Outcomes:

2011-2013 possible tax changes- Reinstated 39.6 percent rate in 2011

- Increase the 33 percent tax rate to 36 percent and change the thresholds for that tax bracket in 2011

- Increasing the threshold would reduce the current 33 percent tax rate on income between the old and new thresholds to 28 percent, reducing the tax liability of people with taxable income in that range. That tax reduction would also offset some or all of the tax increase for people with taxable income above the new thresholds

- The tax savings from the wider 28 percent bracket would fully compensate for the rate increases for couples with taxable income up to $270,533 and single filers with income up to $224,000, giving those taxpayers a net tax cut

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{ 70 comments… read them below or add one }

angela February 12, 2012 at 9:47 pm

I only made little over four hundred last year I have a two ye old.and a three year old we been living with my mom fofor almost 2 yes I am married going threw divorce my mom already did her taxes what is best option for me to claim my kids if my mom would of.claim them would.she.get in trouble even though we have lived with her this long my husband is swinging to claim my kids.bit keep all the money I.meed it so.I.can ghetto my own place can someone help

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Toygirl January 26, 2012 at 10:31 am

This has nothing to do with IRA’s but it is a tax question if someone out there can answer for me. My husband and I are having a disagreement on if a medical bill can be claimed on out taxes for 2011. I say no, he says yes, here the story— The medical claim actually happened on Dec. 12th, 2011 with a balance for us to pay after insurance paid of $981. The bill was not received by us until the 15th of Jan. 2012 which I then sent a check for the full amount to pay it off. The question is which year do we claim that medical expense on our taxes 2011 or 2012?

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andys2i February 12, 2012 at 5:25 pm

Firstly, you may deduct only the amount by which your total medical care expenses for the year exceed 7.5% of your adjusted gross income. For years beginning after December 31, 2012, you may deduct only the amount by which your total medical expenses exceed 10% of your adjusted gross income (per the new health care laws).

In regards to timing, the IRS (Publication 502) says you can only include the medical expenses you paid during the year, regardless of when the services were provided.

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brandee3 February 15, 2012 at 8:31 pm

2012 is when you paid out of pocket.

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Buddy January 18, 2012 at 8:57 pm

Man I hate taxes….the harder I work the more they take. Now I am in a new tax bracket and they get more this year. Just make it a flat tax then it would be much easier!

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Blonde Arsenal November 20, 2011 at 10:33 pm

Obama has created the perfect storm for our country to go broke.This is his change. Kill the economy and capitalism. Plus Obama has created a divide of the classes to his benefit… he wants to get re-elected but doesn’t care what is going on with Americans struggling to buy food or gas. No drilling allowed and all Obama does is waste money on green bankrupt companies pushing his agenda on the American people. Illegals have taken jobs and have sent 17 trillion dollars of American monies back to Mexico since 1997.

Plus we send billions to OPEC nations so we can run the nation and fill our cars and trucks instead of looking for domestic oil . That is a no no from Obama.

Obama wants to raise taxes on the working stiffs and redistribute the wealth to the welfare crowd. Welfare got a raise for a good reason while the last two years the seniors got no cost of living increase. Obama wants to thank all those welfare recipients for sending him 5 or 10 bucks of their welfare money to him so he gave them a raise to make sure they send it in again.

And folks, all you who work and work hard for a living, Obama wants to spend more of your paycheck in the next four years.

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will January 4, 2012 at 4:28 pm

you are an uninformed wacko… Do you think in three years Obama did all these things. The President doesn’t send money anywhere without Congress and the tax increases you talk about… I am a working stiff and have no problem paying more in taxes if that means our country stays stong and viable in the world. If you think taxes put us in the postion we are in… you are wrong. Runaway capitalism put us in this position, the greed of very powerful power in the business community put us here. Instead of posting your opinion you should spend your time getting an education.

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brian englis January 23, 2012 at 7:40 pm

I believe you have a great education, what grade school did you graduate from. You really believe capitalism is wrong, give me your best answer for change, probably socialism. Your such a fool.

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Jessica October 25, 2011 at 2:05 pm

I am happy and grateful that both my husband and I are employed with good jobs and we both obtained good educations that enabled us to get those good jobs. Notes regarding same: we both went to state colleges for undergrad and both were affordable, not so much now. On the other hand we both paid quite a bit for further education and took out loans to obtain same. Those are paid off now, but it took us years to do so, and lots of money. So while we are making good income now, we invested a ton in education costs and lost opportunity.

So, while I’m happy to be paying taxes, I’m not happy that I’m paying the same rate as those above me. And I’m not happy that many above me are paying a much lower % of their income. I’m also not crazy about the 46% who pay nothing in income tax (incl. those who live off investments).

I’m also not happy that so many corporations pay nothing in taxes from year to year, GE I’m looking at you. I’m also not happy as a tax payor that BOA and Citi report profits galore, we helped bail them out and they are not paying taxes. But as a stock holder of both, I’m hoping to collect back some of my TARP dolalrs in goor returns.

I’m not happy with Congress or Obama (although I voted for Obama and most likely will vote for him again, b/c ugh no other choice). I’d like the wars to end and all those dollars we are spending in Iraq and elsewhere to come home.

I’m also not really happy with how my tax dollars are being spent, see above War machine, but also on the State and local levels as well.

So when you add up Federal income tax, SS and FICA (let’s call those payroll tax), property tax, other taxes like gas, sales, etc., capital gains tax (we acutally paid a bit this year), etc., etc. its a huge amount of money and I really don’t think we are getting what we ought to.

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Robert M. Russell January 11, 2012 at 7:11 pm

I agree with much of what you said.

On the corporate level, it appears government bailouts have actually earned the Federal goverment some good profits. This year the profit (over and above the money “loaned”) was about $76B that was returned to the US Treasury; last year it was more.

Nonetheless there needs to be a better way to manage the banking system without playing politics to spin doctor around the causes (Bush Admin warned Freddie and Fannie no less than 12 times the improper reserve levels and loose loending requirements – just to be lampooned as minority prejudice) and use ill-crafted legislation (e.g. – the Barney Frank and Chris Dodds show).

On the personal tax level most regular household incomes range from $40,000 to $250,000 with current top rates (married filing jointly) at 33% and 35% for $212K and $379K, respectively. Two things that seem unfair: as you pointed out everyone must pay at least something so we all share in the cost of this great capitalist country; second the super rich – from entertainers, pro athletes and Wall Street CEO’s (particularly of the early 2000′s) who make multiples of us common folk ($10MM to $500MM) per year – why are they not paying their fair share (not 9-10%)? In the upper part of the regular folk income range the average tax is about 27% (19-20% FIT and 7.65% FICA); why should the super-rich not pay at least this and up to the lower of the two upper brackets?

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brian english January 23, 2012 at 7:44 pm

YOU REALLY NEED TO UNDERSTAND A FEW THINGS. I would love to pay their rates, that means I am not working only investing, this means I have given up ordinary income and only investing. For you to desire them to pay more means that you are envious, obviously not religious, oh well, take aware the rich, and you and I have no fallback position,

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Andchar October 22, 2011 at 11:29 pm

how will my tax return change after I get married? I am a student and I believe we are in the 10% bracket separately and jointly.

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sunder ram September 26, 2011 at 1:41 pm

I want to know what is the tax rate for social security income?

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andys2i September 26, 2011 at 11:10 pm

From the SSA :

Employee/Employer – For 2011, the maximum taxable earnings amount for Social Security is $106,800. The Social Security tax (OASDI) rate for wages paid in 2011 is 4.2 percent for employees and 6.2 percent for employers. For example, an individual with wages equal to or more than $106,800 would contribute $4,485.60 to Social Security in 2011. The employer would contribute $6,621.60.

For Medicare’s Hospital Insurance program, there is no limitation on taxable earnings. Tax rates under the Medicare program are 1.45 percent for employees and employers and 2.90 percent for self-employed persons.

Self Employment – For 2011, the maximum taxable earnings amount for Social Security is $106,800.

For Medicare’s hospital insurance program, there is no limitation on taxable earnings. Tax rates under the Medicare program are 1.45 percent each for employees and employers, and 2.90 percent for self-employed persons.

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Bob & Judy August 2, 2011 at 1:11 pm

We are considering paying off our mortgage, but to do so will have to cash in about $175K of IRAs and are worried about the tax bite for doing that. For tax liability purposes, and assuming all other income/deductions are basically the same every year, we would be better to cash it all in one year, or spread it over two years?

Thank you,

Bob & Judy

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gail August 27, 2011 at 10:29 am

How old are you? If under 59 1/2 you will also pay a 10% tax penalty. You may want to consider a 401K or IRA loan…

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andys2i August 30, 2011 at 11:20 am

You should actually see a financial planner for the above or just do the sums via an Excel spreadsheet (sounds like you have all the numbers). Spreading it over 2 years or one year depends on your marginal tax rate, but should not make a big difference if your income does not change.

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Frank July 19, 2011 at 4:18 pm

I will be 68 years old in 3 months and my wife just turned 67. We have a portfolio of approx 1.2 mil of which almost 400,000 is in IRAs. 300,00 me and 106,000 wife. We are on SS and I receive a very small retirement check. All said and done, we are now in the 10% tax bracket. I’m sure if we convert to Roth IRAs (wife and I), we’d be in the 15% bracket. Looking at the tax brackets, I don’t expect to be ever above 15%. We have no children and plan to leave most proceeds to charities upon death. Read pro and con about converts to Roth IRAs. What do you think regards the above? Roth or not to Roth?

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Rebecca Warren August 24, 2011 at 2:03 pm

I would stay with what you have. Just my opinion though. I am too poor to have any IRA’s, my husband and I are struggling right now raising 4 kids and only his income. But I have been studying about IRA’s for our future when I am able to go back to work and we have money to invest. I personally like Roth IRA’s but taking into consideration your age and assets I would leave it alone. Good luck!

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Edward Rought June 17, 2011 at 8:27 am

I am 68 years old and living on Social Security and a small IRA. I am tired of not being able to sleep nights worrying about my IRA losing money and would like to gradually get out, but at a minimum tax loss. I realize I will have to pay tax on this money but if I take it out gradually, I can keep the tax burden to a minimum. I have a mortgage @4-5/8% that will give me a write off of about $800.00 that I can deduct as well as the property tax of about $4,000.00/year. So my question is, “APPROXIMATELY” how much can I withdraw from the IRA annually and still remain in a max of ten percent bracket. I would appreciate any and all responses.
Thank You,
Ed Rought

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tlludwig June 28, 2011 at 10:39 pm

Hi Ed,

I’m accountant of 10 years and have worked in public accounting under CPA’s for half of those years.

Please read (and reread if necessary) ALL of the information I am providing you until you understand it. Also, if there is any additional information that you failed to provide me then my numbers will NOT work. For instance, other sources of income or adjustments. (For income, see IRS form 1040 lines 7-21 and for adjustments, see IRS form 1040 lines 23-35 or refer to the IRS 1040 Instruction Booklet.) All viewable online.

Based on the 2010 Income Tax Brackets, your taxable income could not be greater than $8,375 for you to remain in the 10% bracket (marginal rate). You didn’t mention if you are married therefore, my numbers are based on you being a single taxpayer. In addition, I used the standard deduction instead of your itemized deductions ($4,000 + 800) because this gives better results. Here’s the math:

Social Security benefits $?
IRA distributions ?
AGI (Line 37 & 38 Form 1040) $17,725 (combined Social Security benefits & IRA distribution income)
Less standard deduction (5,700)
Less personal exemption (3,650)
Taxable income $ 8,375
Tax due $ 838
Marginal tax rate 10%

*AGI means “adjusted gross income”

Your answer is: your combined income can only be $17,725

Just to let you know, to avoid paying taxes on your Social Security benefits, your “modified adjusted gross income” can be not be greater than $25,000 per year. (Based on IRS 2010 base amounts, single taxpayer). If you want to know how to do a quick computation to determine whether some of your benefits may be taxable let me know.

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tlludwig June 29, 2011 at 1:48 am

Oops, I didn’t update my spreadsheet and hit the submit button too soon. That’s what I get for doing this when I’m in a hurry. My apologies Ed.

Edit:
Your combined income can only be $37,725 (based on $20,000 Social Security benefits and $17,725 IRA distribution income).

And your standard deduction is $7,100 not $5,700 because you are over 65.

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Don June 11, 2011 at 4:55 pm

We are considering selling a piece of real estate (a summer home) in 2011 or 12 and will realize a long-term capital gain. (We have had the property 20 tears). We are a married couple retired on pension and SS with an AGI of under $65,000 putting us inI think, the 15% tax bracket at present. In the year we realize the capital gain what might be our capital gains tax percentage and will the capital gain raise our ordinary income (or AGI) that year so that our tax bracket increases? Thanks for your help on this. Don

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andys2i August 30, 2011 at 11:21 am
SanDee January 31, 2011 at 6:52 pm

I was skeptical of the changes being instituted for this year and I just knew there was something being done behind our backs. They reduced the SS deduction by 2%which raised the taxable income by $26 on a $1,300 monthly salary. This increasesed the federal tax withholding by $36. When all withholding is completed the net pay that was $1,114 in 2010 is now $1,104. Transparency? Yes, they are so transparent that no is noticing that the Bush Tax-cut has been manipulated through a series of smoke, mirrors and dishonest political jargon. I feel the people of this country have been insulted by that someone is really dumb to think that no one would notice the discrepancy in their first paycheck. The computations are available on the IRS website in Publication 15 to anyone who would like to verify this.

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Jennifer February 14, 2011 at 2:41 pm

Very well said! Thank you for explaining this so clearly! Even our tax department wasn’t able to explain it.

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Ken April 27, 2011 at 7:16 pm

This is just painfully wrong. The reduction in SS Tax has NOTHING to do with your taxable income, and it did not cause your withholding amount to change.

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Mike January 31, 2011 at 5:29 pm

I’m a retired federal employee. I was happy to see there were going to be no tax increases in 2011. Then I got my Feburary check notice, a 47 dollar monthly increase in taxes and 30 dollar monthly increase in my health care plan. That’s 77 dollars A MONTH for no increase. How long until I have to take that Walmart greeter job so I can eat?

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carolyn faulkner February 14, 2011 at 3:36 pm

Mike, I know how you feel. I am a retiree of a major corporation and, like you, when I received my February check I was surprised to find they had held an addtional $32 a month out of my check. When I called, I was told, “Sorry, you have been affected by the new 2011 Tax Law.”

I am working part time but was told today by my accountant after preparing my taxes for 2010 that the only thing that was accomplishing was putting me in a higher tax rate.

Bottom Line: You can’t win!!! I, for one, am looking forward to the next election.

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Chris January 27, 2011 at 11:20 pm

As a retiree in the Civil Service Retirement System, what can I expect in the way of tax withholdings in 2011.

i.e.- how does the 2% payroll tax cut effect me since I do not pay FICA? Also since I do not have income (only pension ) what else can I expect? My first annuity check for 2011 had a $25.00 increase in federal withholdings. Can you offer any explanation?

Thanks

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Tim January 30, 2011 at 8:16 pm

Chris, the 2% payroll tax cut everyone is talking about is a 2% reduction in the employee Social Security withholding tax rate for the next two years. If your situation is such that your income is not subject to Social Security tax withholding, you won’t see an increase in your income as a result of that rate decrease.

What really disturbs me is something that it seems no one is talking about. In 2010, for a single person, the first $3,650 of ordinary income was exempt due to your personal withholding allowance. The next $6,050 of ordinary income was in the lowest income bracket of 0%. Thus, no income taxes were paid on the first $9,700 of ordinary income.

In 2011, for a single person, the personal withholding allowance has increased to $3,700, but the 0% income tax bracket has been reduced to only $2,100! Thus, in 2011, only the first $5,800 of ordinary income will be free of income taxes. This change will result the following for a single person:

For an ordinary income between $0 and $7,250, income tax plus SS tax will be less than or equal to what it was in 2010. However, for an ordinary income between $7,250 and $18,937.50, income tax plus SS tax will be GREATER than or equal to what it was 2010! Here are some examples showing the changes in income tax plus SS tax:

Income Change in 2011
$5,000 -$100
$10,000 +$190
$15,000 +$44
$20,000 -$21
$30,000 -$221

Not only does the 2011 tax code provide the largest benefit to the wealthiest, it actually does so at the expense of those who need it most.

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jane m January 25, 2011 at 6:23 pm

My Verizon pension check this month was $32.15 less, and I was told that the government had given me a tax credit of $400 and now they are taking it away. I have to repay this amount monthly until the $400 is repaid. What was the tax credit for. and why are some retirees havong to pay it back and others are not? Why?

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Martin V January 21, 2011 at 9:47 pm

When will I get my W2 from my employer and has the tax filing deadline expired?

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andys2i January 21, 2011 at 9:47 pm

- Key Dates for 2010-2011 Tax season:

* The IRS begins accepting e-file – January 11, 2011
* W-2’s due to employees (unless IRS exemption provided) – January 31, 2011
* Tax Filing Deadline or request for extension– April 18, 2011

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LENORE January 17, 2011 at 6:28 am

Hello Andy
I am so fortunate to have come across this site. My first check for 2011 reflected a $33.00 increase. Your information about employers not updating their systems to reflect the 2% payroll tax cut was most helpful.
Lenore

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Kaye January 15, 2011 at 6:31 pm

I also just received my first paycheck for 2011. I am making $16 less. What happened to people should see more money?

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andys2i January 15, 2011 at 9:43 pm

A few people have said this. It is due to employers not updating their systems to reflect the 2% payroll tax cut. However, because if was published earlier, they did update their systems to reflect the expiration of the making work pay credit. The impact of this is that a number of employees will see a pay cut until employers/payroll providers update their systems. By Law they have until Jan 31st 2011 to do this, and until March 31st to make any adjustments for under/over payments.

However I would still contact your payroll dept to get a definitive answer.

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Anna January 14, 2011 at 12:38 pm

Hi Andy –
 
Today, TurboTax announces the nationwide availability of SnapTax the first of its kind, start-to-finish app to file your taxes from your phone. Now available on iPhone Android mobile phones, SnapTax makes it incredibly simple to file your taxes right from the palm of your hand.
 
SnapTax lets users prepare and file taxes with a few easy steps:
Snap a photo of the W-2 form with the iPhone or Android phone
Using optical character recognition (OCR), data is quickly transferred to the tax return
Answer some basic questions
Check the tax return for accuracy
Tap “File Now” and electronically file the return
 
SnapTax is available to download for free in the Apple App Store and Android Market.  When ready to file, you pay the introductory price of $14.99, which includes federal (1040EZ) and state preparation and e-file

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carolyn January 13, 2011 at 10:55 am

Fyi. Just received my first pay of 2011, have not had an increase in wages for 4 years now. Today I am taking home $21.63 less since my last pay of 2010. Go figure all you experts!

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commonsense January 10, 2011 at 2:01 pm

it’s funny to read your ignorant tantrums AFTER obama capitulated to republicans yet again

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andys2i January 5, 2011 at 10:03 pm

Per reader request, here are the tax brackets (and change from 2010) for head of households and married filing separately tax payers.

Tax Brackets for Married Filing Separately:

10% – $0-$8,500 (up from $0-$8,375 in 2010)
15% – $8,500-$34,500 (up from $8,375-$34,000)
25% – $34-500-$69,675 (up from $34,000-$68,650)
28% – $69,675-$106,500 (up from $68,650-$104,625)
33% – $106,500-189,575 (up from $104,625-$186,825)
35% – $189,575+ (up from $186,825+)

Tax Brackets for Head Of Household:

10% – $0-$12,150 (up from $0-$11,950)
15% – $12,150-$46,250 (up from $11,950-$45,550)
25% – $46,250-$119,400 (up from $45,550-$117,650)
28% – $119,400-$193,350 (up from $117,650-$190,550)
33% – $193,350-$379,150 (up from $190,550-$373,650)
35% – $379,150+ (up from $373,650+)

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tdav January 6, 2011 at 1:05 pm

The tables I am speaking of directly impact your paycheck (tables for Income tax Withholding)
Since I run payroll monthly I will use that table:

(b) married person-
if the amount of wages (after subtracting withholding allowances) is:
not over $658 the amount of income tax to with hold is $0
over- $658 but not over….$2075 withholding is 10% of the excess over-$658

in 2010:
not over $1146 the amount of income tax to with hold is $0
over – $1146 but not over …..$2042 withholding is 10% of excess over $1146.

So by this you start paying taxes on what you make at the point of $659 instead of $1147. So you pay taxes on $488 this year that you didn’t last year. Therefore where is the extra money in your paycheck that they keep talking about? They took it away one place and put it in federal tax by lowering the point that withholding starts.

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Larry Dahleen December 29, 2010 at 9:12 am

You must be a liberal. Solve our budget problems by raising taxes!! You cut the spending
and everyone benefits.

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Ken December 29, 2010 at 3:27 am

How about the base amount for the housing exclusion?

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JonG December 19, 2010 at 10:07 pm

I believe your table “2010 vs. 2011 Federal Income Tax Rate Bracket Table” has an error. It shows the 15% bracket as $8625 to $35,020. However, the 25% bracket on your table starts at $35,200, a gap of $180. Likely a typo. I expect you intended the lower number in both cases ($35,020)?

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andys2i December 20, 2010 at 7:25 pm

Thanks for the catch. You are right it was a typo and I will fix asap.

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William December 19, 2010 at 8:07 pm

Guess what you have been dooped I see people in joy for the the extention of the Bush Tax Cuts and one year lowering of the social security for one year. Its all a push Ill give you 2% break on social security for one year yet yet they take away the work for pay credit 400.00 for singles 800.00 for married. just watch out I feel its all going to bite you if you dont prepare.

william

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TAMMY January 5, 2011 at 11:54 am

I GET A SALARY ONCE A MONTH. JUST DOWNLOADED NEW TAX RATES (AS AM PAYROLL CLERK) CHECKED THE TAX TABLES, RAN THE NUMBERS. I GOING TO TAKE HOME 30.00 LESS. WHERE IS THE EXTRA MONEY THEY KEEP SAYING WE WILL HAVE IN OUR PAY CHECKS. ALL I SEE IS THE RELOCATED THE MONEY FROM SS TAX TO FED TAX. YOU’RE RIGHT! WE THE PEOPLE HAVE BEEN DOOPED! TAX RATE DIDN’T INCREASE, THEY LOWERED THE AMOUNT THAT YOU START PAYING TAXES ON. BY APPROX.600.00 ON A MONTHLY PAY. WHAT A JOKE. JUST LIKE PROPERTY TAXES THEY DON’T INCREASE THE TAX, JUST YOUR ASSESSMENT.

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Jennifer December 8, 2010 at 2:53 pm

Carolyn.. You are literally one of those most idiotic human beings i ever had the misfortune of reading from. The expiration date was built into the plan, and if obama wasnt president- and it was some elephant from Indonesia- guess what? They would still go back to what they were before. I am loving the fact that no one can collect a child tax credit if they dont make over 12k. Why should the government give money to those who do not want to make money on their own. I am sick of hearing about all of this. it has nothing to do with color of skin, political party, or ones personal beliefs. Idiots will argue about anything, especially when they do not understand it. You sound like an ass clown.

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Snuggle January 28, 2011 at 2:36 pm

What the heck is an “ass clown”??? LOL!!

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Bee January 30, 2011 at 9:04 am

Better to be an “ass clown” than a plain “ass”, as is someone like you

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Skulls May 23, 2011 at 8:52 am

Actually an ass clown is worse… terrible come back..

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Bryan November 19, 2010 at 4:35 pm

If I may add — the expiration of the tax cuts looks like a tax increase in a one-year view — 2011 is higher than 2010.

But taken as a 10-year view, the 2011 taxes are *the same* as the 2000 taxes.

So taxes would be no higher than they were 11 years ago (and actually less in real dollars).

Isn’t that worth noting?

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Bryan November 19, 2010 at 4:31 pm

I’m put off by the first part of this post, in which you state:

“Higher Tax Rates with Repeal of Bush Era Tax Cuts — Beginning in 2011, tax rates that were in effect prior to 2001 and 2003 will be restored if President Obama does not extend the Bush Tax Cuts.”

This is a widely-held, but very wrong, belief. (1) The expiration of the tax cuts is not a *repeal* — it is, in fact, part of the tax cuts. Title 9 of the 2001 tax bill called for these cuts to expire on 1/1/11. The 2003 tax bill used the same expiration date. So there is no *repeal*. The expiration is part of Bush’s tax plan (and expiration was approved by all House Republicans and all but two Senate Republicans). (2) For the same reason, Obama does not need to *extend* the tax cuts; he could add tax cuts of his own, to take effect 1/1/11, retroactively if needed.

So there is no *repeal*, and there is no *tax increase*, and this is not Obama’s (or the Democrats’) *fault*. Bush wanted the tax cuts to expire after he left office, as part of the Bush tax plan.

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James December 7, 2010 at 2:30 pm

Bryan,

Your analysis lacks the fact that the tax cuts were not passed in the traditional way so that it could not be filibustered. The intent at the time in 2000 was to have them be permanant but under the rules by which they were passed, they could only be for 10 years.

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Wanda August 25, 2010 at 3:09 am

To the person that thinks that this is a problem caused by Democrats please think and think again, we were under Republican rule and two wars for the last seven and a half years! This didn’t occur overnight or in the last two years.Maybe this is something Democrats are use to but we are all going down with the ship this time. This is not a party issue, this is an issue designed to have two class of people in this country rich/poor.

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Sarahj July 24, 2010 at 3:44 pm

How can anyone think we shouldn’t raise taxes because the underlying problem is spending? Obviously we need to attack this from both sides and cut spending and raise taxes.

If you have 50,000 in credit card debt because you love to shop, are you going to refuse to pay more than the monthly interest and explain to your creditor that you don’t want to pay more, because your spending habits are the issue, not the debt? I am sure they would disagree with you.

We can’t just ignore the debt and try to curb spending. The deficit will not go away, no matter how deeply you bury your head in the sand.

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Tonyj July 25, 2010 at 8:09 pm

So, you trust the politicians to reduce spending once they get massive amounts of new tax dollars? Neither do I, and that’s why we don’t want to raise taxes. Cut spending first, then let them talk about raising taxes. In an ideal world, politicians would do both. Unfortunately, ideals are the first thing that get swept under the rug.

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Carolyn P May 31, 2010 at 12:08 pm

Remember during the election Mr. Obama said he would not raise taxes on any one making less than 250,000( or was it 200,00) both figures were used .Well what do you think doing away with the marriage penalty relief is going to do – raise taxes as it stands now married couples get double the standard deduction say bye bye to that. Child tax credit will be reduced to 500.00 which means any one with a child under age 17 will only get 500.00 per child so if you have a tax liability of 1,000 in 2011 under Bushes tax cuts all your federal income tax withheld would have been refunded under Obama the government keeps 500.00 of your withholding reducing your refund be 500.00 and to get the additional child tax credit in 2011 you will have to make more than 12,550. Mr. Obama you want to learn the tax code I know some real good instructors . Take a tax course

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Michelle May 30, 2010 at 7:57 am

OMG I can’t pay tax bill as it is and these dumbocrats want more. I could see if we were in a high flying booming economy, but we are a broken system. Everyone I know around me has been on unemployment since this mess began and its not because they can’t find a job, its because they do not care. My one friend who gets unemployment is going on VAcation for 2 weeks. Im like I work 80 hours a week almost, struggle to cope with the taxes I get and these slackers are the ones going on vacation? This is not right and very unfair. I am going to do some serious financial planning this year and I will make sure the Government will not see 1 more dime out of me. I will not be part of Obamas distribute my wealth to his Acorn cronies . Change is coming in 2012 and I hope Dumbocrats never see power again muss less The White House!

We have the one of the highest corporate taxes in the world, How in the world are we supposed to be competitive and say in business? This President was the biggest slap in the face to independent business owners and to real Americans who rely on themselves and not the GOVERNMENT. This GOVERNMENT is to big and should fail !

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RICK May 29, 2010 at 1:05 pm

If I only were an illegal alien, I would not have to pay any income taxes. Freeloading democrats don’t pay any income taxes either. The democrats need to change their name from the democratic party, to the freeloading party. When a Republican needs a pay raise, he works harder or gets a second job. When a democrat needs a raise, (s)he has another welfare baby. Ever wonder why 90% of all college graduates vote Republican, and 90% of all school dropouts vote democrat. If you can’t figure out the answer, then you’re a democrat. There is only so many freeloading ticks that the dog can withstand before they kill the dog. Just look at Greece for a perfect example.

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wanda July 25, 2010 at 11:45 am

You have sterotyped all democrats. Not all democrats are illegals or having welfare babies.
I know plenty of people that claim to be republicans that are on welfare. They are U.S. born citizens and are milking the system too. This isn’t a party issue, in my opinion neither party has been working for the American people in over 25 years. Our politicians, Democrat and Republican, work for and serve in the best intrest of Wall Street. I don’t know where you’ve been for the last 3 years, but there aren’t that many jobs to be found.
Democrat or Republican isn’t the issue. When Bush signed the Bill that gave tax cuts to the richest 1% his exact words were, “Let’s starve the beast.” The “beast” he was referring to was the middle class; mission accomplished, the middle class is being systematically dismantled.

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William December 19, 2010 at 8:14 pm

wanda, I have never seen a working republican milk the system that was a US citizen watch how many democrates throw each other under the bus after Jan 20
William

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Sachin November 10, 2011 at 2:54 pm

Do you leave your home and mingle among the citizenry or are just opining after reading some idotic blog?

Your comment sounded more insane then decieving.

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Jacey June 2, 2011 at 2:57 pm

At last! Someone who undraestnds! Thanks for posting!

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Erica December 20, 2010 at 10:34 pm

@RICK you are so wrong. If you were and illegal alien as you call them you would have to pay taxes, and you wouldn’t see any tax refunds at the end of the year, so please do some research please before you making those comments. EDUCATE YOURSELF.

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DENISE January 7, 2011 at 8:26 am

I AM A REPUBLICAN AND I DONT THINK ITS ILLEGAL PEOPLE HERE MILKING THE SYSTEM DO SOME RESEARCH ALL THE RICH PEOPLE HAVE BETTER INSURANCE PLANS ETC…………..I ALSO MAKE $85,000 ANNUALY AND ITS NOT FAIR TO POINT FINGERS THEIR JUST RYING TO MAKE A BETTER LIFE FOR THEMSELVES IS THAT SOOOOOOOO WRONG? BLAME YOUR GOVERNMENT…….THERE ARE SO MANY UPPER CLASS PEOPLE MILKING THE SYSTEM ITS UNREAL I COULD SCHOOL THE GOVERNMENT ON ALOT OF THINGS………

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Aury (Thunderdrake) May 21, 2010 at 1:44 am

Gosh. Those tax raises are going to be felt on the middle upper class families. Owwies.

The Roth IRA is a nice little haven for growth of investments I think. For investments, I advise people to get the hell out of their 401k’s and into this instead. Because of how the 401k is taxed like regular income IE like a medieval peasant.

That dividend tax is going to be a real pain. This is REALLY where the Roth IRA/TSFA is going to come in handy.

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Ren April 28, 2010 at 9:43 pm

>I would love to see an analysis of whether it is likely to make sense to defer the ROTH conversion taxes to 2011 and 2012 for various tax situations. For higher income earners, the additional taxes that are likely to exist after 2010 may make it much more beneficial to forgo the deferral and pay the taxes for 2010.

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Alex B April 26, 2010 at 10:52 pm

>I'm glad I took the time to read what you had to say! Excellent post, thank you….Alex B.

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