Shopping Cart
Your Cart is Empty
Quantity:
Subtotal
Taxes
Shipping
Total
There was an error with PayPalClick here to try again
CelebrateThank you for your business!You should be receiving an order confirmation from Paypal shortly.Exit Shopping Cart

BlackStar Investments

Tax and Financial Services

My Blog

Blog

Biggest Tax Stories of 2011

Posted on December 23, 2011 at 11:57 AM
There was not a ton of tax news this year, due to a welcome lack of legislation. So for one year in a row, the Internal Revenue Code was not a constantly moving target. Thank you Congress. Still, there were two significant developments and one significant non-development. Here, in my opinion, are the three biggest tax stories for 2011.
1. No Grand Tax Compromise
Earlier this year, when it became obvious to even the most jaded observers that the federal debt load had reached and exceeded the point of extreme scariness, it looked as if "tax reform" combined with "spending cuts" might be combined in a "grand compromise." No such luck. When push came to shove, the Democrats and Republicans couldn't even agree on where to go to lunch, much less on big changes in tax policy. So the deficit reduction problem was punted to a "super committee" which then failed to reach a consensus. As a result, automatic spending cuts are supposed to kick in to the tune of about $1.2 trillion (a number that looks increasingly inadequate) over 10 years. There are no automatic tax increases in the super committee deal, and none may be needed -- because the so-called Bush tax cuts are scheduled to expire (again) at the end of 2012. If that is allowed to happen, massive tax increases will take effect in 2013.
2. Temporary Social Security Tax Cut
For 2011 only, the withholding rate for the employee's share of the Social Security tax was reduced from the usual 6.2% to only 4.2%. For self-employed individuals, the Social Security tax component of the self-employment tax was also reduced from the usual 12.4% to 10.4%. For 2011, the Social Security tax hit the first $106,800 of wages or self-employment income, so the maximum savings from the cut was $2,136 (2% x $106,800). A married couple can save as much as $4,272 (2% x $2,136). Anyone with wages and/or self-employment income benefits to some degree from this arrangement.
For 2012, there's still a good chance the Social Security tax reduction will be extended and maybe even increased to 3%. But there will apparently be a lot of political gamesmanship before that happens. (For 2012, the Social Security tax will hit the first $110,100 of wages and/or self-employment income.)
3. New Estate and Gift Tax Regime Takes Effect
Legislation enacted in 2010 established a favorable new federal estate and gift tax regime that took effect in 2011 and continues through 2012.
* For estates of individuals who died in 2011 or made gifts in 2011, there's a $5 million unified federal estate and gift tax exemption.
* For estates of individuals who die in 2012 or make gifts in 2012, there will be a $5.12 million unified exemption.
* The estate and gift tax rates are both a flat 35%.
* Married individuals who die in 2011 or 2012 can pass along their unused federal estate and gift tax exemptions to their surviving spouses. In other words, unused exemptions are "portable." The ability to effortlessly pass along unused exemptions to surviving spouses allows both spouses' exemptions to be utilized without having to set up trusts or engage in other tax planning maneuvers that were previously necessary.
* For heirs of decedents who die in 2011 and beyond, the familiar rule that allows the federal income tax basis of inherited capital-gain assets (such as real estate and stock) to be stepped up to reflect fair market value on the date of death was reinstated. With the restoration of the unlimited basis step-up rule, heirs won't owe any federal capital gains taxes on appreciation that occurs through the date of death -- as long as that date is in 2011 or later.
* All but one of these beneficial changes will expire at the end of 2012 unless Congress takes further action. The unified gift and estate tax exemption will fall back to a paltry $1 million, the maximum estate and tax rate will go up to a punitive 55%, and the portable exemption deal will die. The only taxpayer-friendly provision that will survive is the basis step-up rule for inherited capital gain assets (it's permanent, until Congress changes its mind).
Stay Tuned for the 2012 Action
As I said at the beginning of this article, there was only limited tax news this year, and we will probably not see any really big developments until after the 2012 election -- unless you consider an extension of the Social Security tax reduction a really big development. For next year, we already know what the biggest story will be. We just don't know the final outcome. Will the Bush tax cuts really be allowed to expire at the end of 2012 or will they be extended once again? Will the current estate and gift tax regime really be allowed to expire at the end of 2012 and be replaced by a harshly anti-taxpayer regime? The answers to these questions will almost certainly depend on how the election turns out. Whatever happens, I'll do my best to keep you informed.

Categories: Tax Topics

Post a Comment

Oops!

Oops, you forgot something.

Oops!

The words you entered did not match the given text. Please try again.

44 Comments

Reply essay writing service uk
4:25 PM on September 30, 2018 
More process and effective techniques about combined teaching methods and essay services for reduction problems. I am very happy to visit the blog and committee dealing for tax based system.
Reply essayswriting review
6:40 PM on August 8, 2019 
hi guys we have one of the best card game you must love to Freecell Solitaire one of the best online multiplayer card game.
Reply grabmyessay review
6:13 PM on December 11, 2019 
so happy to find good place to many here in the post, the writing is just great, thanks for the post.
Reply v
5:05 PM on February 25, 2020 
v
Reply best websites that write papers for you
12:45 PM on February 28, 2020 
I have a situation wherein a person won in the trial even though he is a criminal. Yes, he won because he has a good lawyer and money. Everyone in this world can't live without money. Money is everything. It defines a person whether he is rich or poor. Social classes from Ancient slaves holding society to feudal society, to capitalist society, had always been at war against each other. The slaves versus masters. A slave is a person who is legally owned and forced to obey their masters, on the other side a master is a person who has people working for them. The slaves are working for the growth of the company owned by the master. They also demand a high cost of their service but the masters ignore it for them to earn more profit out of the work of their servants for them. Slave women were forced to comply with sexual advances by their masters on a very regular basis.
Reply Fur Sheepskin Coat
5:37 PM on March 28, 2020 
This article is really contains lot more information about This Topic. We have read your all the information some points are also good and some usually are awesome. Great post I would like to thank you for the efforts you have ma
Reply
7:37 AM on April 7, 2020 
Very well written article about biggest tax stories, Must admit that you are one of the best bloggers I ever saw.Thanks for posting this informative article.
rubber flooring for sale in UK
Reply
9:04 AM on April 7, 2020 
I am happy to find this website, you have shared articles about tax stories. just what i was looking for and i am looking forward to reading your other posts soon.
Garage Shelving UK supplier
Reply Carter
10:19 AM on April 7, 2020 
Great work,its a nice content. It generates for me lots of pleasure and interest.
heavy duty tarpaulin
Reply Andy
10:21 AM on April 7, 2020 
Every one of the posts of this blog is generally excellent and successful. I am truly eager to discover this post. Thanks and carry on it.

furniture casters
Reply Jike
10:29 AM on April 7, 2020 
It was an amazing experience visiting your site, all the blogs here are as per the standard of the query. Really appreciate your effort for this.
garage metal shelving systems
Reply Jamy
10:36 AM on April 7, 2020 
What a good post here.You have done a very good work to share a very good post with us taking out your time to explain in detail.Thanks
exceptional quality rubber gym flooring
Reply Mimy
12:09 PM on April 7, 2020 
This was really an interesting topic and I kinda agree with what you have mentioned here
purchase camping tarp shelter
Reply Adney
12:21 PM on April 7, 2020 
This post has helped me for an article which I am writing. Thank you for giving me another point of view on this topic. It is very informative for me and i gain a lot information from it. Now I can easily complete my article. Thanks for sharing and keep on sharing.
Rubber playground tiles
Reply link
12:34 PM on April 7, 2020 
I read your excellent post. After reading this post, i really appreciate your effort and my request is to please share us more post in future. Keep it up.
Reply Tinker
3:18 PM on April 7, 2020 
I Appreciate Your Efforts In Preparing This Post. I Really Like Your Blog Articles.

Quality thawing tray
Reply Salv
12:35 AM on April 8, 2020 
You are doing really good work. I appreciate your hard working. Thanks
Search driving lessons Birmingham
Reply Borris Johnson
5:44 AM on April 8, 2020 
When i first visited your blog i was not sure that it will be quite effective, its my second visit and i am really happy about your site content. Keep sharing.
Get Gym mats help in drainage without damaging for gymnastic from http://rubbermattingexperts.co.uk/rubber-matting/gym-mats.html
Reply David Cameron
6:19 AM on April 8, 2020 
I am not a very fond visitor but reviewing this site and your blog i must say that i will visit again. Your blog is just amazing. Thanks.
http://expressrubbersheets.co.uk/
Reply Allen Musk
7:06 AM on April 8, 2020 
It was a really fresh experience by visiting your site and honestly found what i was looking for. Really appreciate if you keep sharing on your site. Good article.
heavy duty garage shelving units
0