Boomers Need to Prepare for the 2011 federal Tax Brackets

Tax cuts that were sanctioned and legislated by President Bush in 2001 and 2003 will expire in 2010. Initially intended to help all income levels including the low, middle and higher income workers it appeared that only the higher income brackets of Americans benefited from the legislation. However, many taxpayers should brace themselves for the 2011 tax season. They will no doubt see a rise in the amount owed to Uncle Sam.
2011 federal Tax Brackets
What is “paying our fair share” mean? Our federal deficit is rising, we are in a recession period in our country and previous tax codes are scheduled to expire Americans may be in for a triple whammy. There are expectations for the 2011 tax year that many of us may have never seen before.

IRS Federal Tax Brackets

Tax brackets that many of us are generally familiar to may change this year when our taxes are filed. The brackets will increase to the pre-Bush error levels. The recession has caused President Obama’s plan to simply allow the tax cuts to lapse to change. Changes were proposed and of these changes the top two federal tax brackets would be resorted back to 36% and 39.6%.

Groups such as the Tax Foundation have reviewed various filers and come up with projections for the 2011 federal income tax brackets.

There estimates for married and singles filers are;

Federal Income Tax Brackets For 2011–Based On Taxable Income Ranges

Tax Rate   Married Couples Filing Jointly     Most Single Filers

10%           Not over $17,050                   Not over $8,52515%           $17,050 – $69,300                 $8,525 – $34,650

25%           $69,300 – $139,850             $34,650 – $83,900

28%           $139,850 – $235,550           $83,900 – $194,150

36%            $235,550 – $380,500           $194,150 – $380,500

39.6%        over $380,500                         over $380,500

These amounts are subject to President Obama budget.

In addition to the Bush tax cuts affecting the 2011 income tax brackets, there are other projections for 2011 taxes. These are based on expert predictions for 2011 tax year.

  • Increasing the standard deduction-

From $5700 to $5800 for single filers and $11,400 to $11,600 for married filing jointly

  • The estate tax is back-anyone deceased after 2010, the estate tax will be a maximum of 50% with an exemption of one million dollars
  • Increase in the long term capital gain rate-temporarily decreased from 20% to 15%. If you are in the 10%-15% bracket you will only see 5%
  • Qualified dividends-this can be taxed as ordinary income
  • Child tax credit-the $1000 credit will be reduced to $500

Now is a great time to review your deductions for your taxes for 2011.  This is the time of year that you are gathering your information together and getting your accountant on the phone to set up a time to get the deed done for 2011, taxes.

I sincerely hope this has provided you with some valuable information you are able to use concerning changes to the 2011 tax brackets.

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