We all might see higher taxes if Congress by the end of 2010 does not extend the tax cuts President Bush signed into law in the midst of his presidency. Expiration of such tax cuts has the potential to crimp further economic growth.
HIGHER TAX RATES FOR EVERYBODY
Unless Congress acts, the current rate brackets of 10%, 15%, 25%, 28%, 33% and 35% will be supplanted with 15%, 28%, 31%, 36% and 39.6% consecutively. This change means everybody will have to pay higher taxes regardless of their income, with some exceptions.
HIGHER CAPITAL GAINS RATES AND DIVIDENDS RATES FOR EVERYBODY
Currently, the maximum federal rate on long-term capital gains and dividends is 15%. However, this will change to 20% for long-term capital gains and skyrocket to 39.6% for dividends for most taxpayers, unless Congress acts.
In addition, taxpayers in the lowest brackets (10% and 15%) will have to pay around 15% on long-term capital gains and 28% on dividends. Such taxpayers now pay 0% on both long-term capital gains or dividends.
RESTORATION OF MARRIAGE PENALTY
Currently, the standard deduction for couples filing jointly is about double the amount for singles. Unless Congress acts, the marriage penalty will force married couples filing jointly to pay more starting from 2011. This standard deduction for married couples, in fact, will be 167% of the amount for singles. This means, married couples filing jointly will have slightly more than half of singles to deduct from their taxes, as part of standard deduction in 2011.
DORON EGHBALI is a Partner at the Beverly Hills Offices of Law Advocate Group, LLP. He Primarily Practices Business, Real Estate and Entertainment Law. Doron Can be Reached at: 310-651-3065. For More Information, Please, Visit: HERE.
We all might see higher taxes if Congress by the end of 2010 does not extend the tax cuts President Bush signed into law in the midst of his presidency. Expiration of such tax cuts has the potential to crimp further economic growth. Let us see what changes might loom large.