[Update] – See this article for 2012 and 2013 Tax Rates/Brackets
- Personal exemptions and standard deductions will rise and tax brackets will widen due to inflation adjustments related to provisions that were either modified or extended by the legislation extending the Bush-Era tax cuts. The value of each personal and dependent exemption, available to most taxpayers, is $3,700, up $50 from 2010.
- The new 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. 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 standard deduction for an individual who may be claimed as a dependent by another taxpayer cannot exceed the greater of (A) $950, or (B) the sum of $300 and the individual’s earned income.
- 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.
- The 2% payroll tax cut and making work pay credit impacts have been reflected in the latest tax table.
Several tax benefits will also remain unchanged in 2011. For example, the monthly limit on the value of qualified transportation benefits (parking, transit passes, etc.) provided by an employer to its employees, remains at $230.
The IRS also announced that as a result of delays in passing the the tax extensions and from new tax breaks, some tax payers may face delays with filing and receiving their returns. People claiming the state and local sales tax deduction, higher education tuition and fees deduction and educator expenses deduction as well as those taxpayers who itemize deductions on Form 1040 Schedule A — will need to wait to file their tax returns until tax processing systems are ready, which the IRS estimates will be in mid- to late February.
The IRS will announce a specific date in the near future when it can start processing tax returns impacted by the late tax law changes. In the interim, people in the affected categories can start working on their tax returns (e-file recommended), but they should not submit their returns until IRS systems are ready to process the new tax law changes.
I will provide an update when these issues are resolved and for other tax information I encourage you to subscribe (free) to get the latest news.
Source : IRS