In recent years many of our income tax deductions have been temporary breaks with a shelf life of a couple of years. Over the next 14 months dozens of tax breaks will be expiring. Some may be extended and others will probably disappear. From year to year you cannot assume that the same benefits will be available for your tax return. Below I have listed some of the tax breaks that will be on the chopping block.
Expiring on 12/31/2011:
- School teacher expense deduction of $250.
- Option to deduct State and local sales tax.
- Mortgage insurance premium deduction
- Alternative minimum tax (AMT) patch that allows a larger exemption. Without this millions of additional taxpayers will get hit with AMT.
- The 2% reduction in Social Security tax withheld from our paychecks.
- The tuition and fees deduction of up to $4000.
- Tax free donation of IRA distribution for seniors.
- The $500 credit for energy saving improvements to your home.
- The low capital gains rate.
- Qualified dividends being taxed at the low capital gains rate.
- The American Opportunity education tax credit of up to $2,500 for tuition paid.
- Deduction for student loan interest.
- Education IRA contribution limit drops from $2,000 to $500.
- The 10% tax bracket disappears.
- Child care deduction limit is reduced back to $2,400.
- Child tax credit for children under 17 drops to $500 from $1,000.
- Marriage penalty is back.
- Earned income credits will be greatly reduced.
- Debt forgiven on home foreclosures will be taxable.
- Many others...
(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp. The author's opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).
IRS CIRCULAR 230 NOTICE: To the extent that this message or any attachment concerns tax matters, it is not intended to be used and cannot be used by a taxpayer for the purpose of avoiding penalties that may be imposed by law.