As many of you know, Congress has extended the "Bush Tax Cuts". It came via a compromise, which also allowed unemployment benefits to be extended another 13 months.
Prior to the law passing, some were suggesting that you sell your stocks that have realized gains and pay the tax this year, because next year tax rates would be higher. This is no longer the case, so feel free to hold on to your stocks, because the capital gain rate will remain at 15% for long term gains.
One thing that is helpful for businesses is the new 100% depreciation provision. Typically a business that buys equipment and other assets will need to depreciate the asset over it's prescribed useful life. Most of the time that will be 5 or 7 years for machinery and equipment. For tax purposes, you can expense the whole thing in the year you buy it, provided the deal was signed and/or asset was purchased after September 9, 2010 through the end of 2011.
Businesses as well as individuals should look for ways to accelerate expenses into the current year. An example might be to make that charitable contribution today, rather than waiting until next year. You can even put the donation on your credit card and pay it next year, while still getting the tax deduction. I don't recommend making credit card donations, unless you will have the money to pay them off right away, however.
On the individual front, there is an increase in the amount you can deduct for educational expenses and also the child tax credit went up from $500 to $1,000. It will also lower the amount of Social Security tax that individuals will have to pay in from 6.2% down to 4.2% of your earned income. This will mean larger take-home pay. You can calculate your amount at Kiplinger.com or this link: http://tinyurl.com/29dh6f9
Other provisions in the tax law include incentives for higher education, via tax credits as well as deductions for those under certain income earning levels, up to $4,000 and also generous estate tax provisions.
In summary, the tax law kept things at least as "good" as they have been since the Bush Tax Cuts and in some areas it provides enhanced benefits.
By no means should this article be considered to address all aspects of the 2010 tax law. It should be considered a summary only of specific items. Always consult your tax professional regarding applicability of tax provisions to your circumstances.
