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Need Some Deductions for 2011?

Don't overlook these!

10 Oddball Tax Deductions

11 Most Overlooked Tax Deductions

Updated for 2011

December 17, 2010 -Obama Signs the Tax-Cut Bill into Law.

The bill passed the House by a vote of 277-148 and extends the Bush-era tax cuts (2001-2003) two years. The tax cuts were set to expire December 31, 2010.

Unemployment benefits will also be extended for 13 months for those who have  used up their 26 weeks of state benefits.

The bill also provides:

  • A 2 percent decrease in the employee's portion of the social security tax (from 6.2% to 4.2%) for one year.
  • A rise in the the estate tax rate from zero percent in 2010 to 35% for estates over $5 million.
  • The law sets the gift tax and generation-skipping transfer tax exemptions at $5 million as well.
  • An extension of the alternative energy credits that were part of the federal stimulus bill.
  • More liberal accelerated depreciation rules will allow a business to write off a higher portion of the cost of equipment in the year purchased rather than having to write-off the cost over several years.

The IRS have given employers guidance on adjusting the the social security rate applied to employees' gross wages.

Employers were advised to reprogram their payroll systems as soon as possible, but not later than March 31, 2011.

The 2% reduction is for one year.  It will add an extra $20 in your pocket for every $1,000 of gross earnings (2% x $1,000) up to the ceiling of $106,800. If you earn $500 each pay period, you'll see $10 more in your check (2% x $500).

Give your employer a chance to reprogram the payroll system. If you overpay on the first one or two checks, don't worry, it will  be made up in a subsequent check by decreasing your social security withholding accordingly.

Advance Earned Income Credit Repealed

The Education Jobs and Medicaid Assistance Act of 2010 signed into law August 10, 2010 repealed the Advance EITC.

After December 31, 2010, workers can not receive Advance EITC in their paychecks. Advance EITC is also known as AEITC or AEIC. Workers who received Advance EITC or AEITC on their paychecks during 2010 need to file a tax return to report the amount received.