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some quick and vicious facts about US tax changes for 2011:
Bad news, for you:
The Making Work Pay credit is dead. This will cost you $400 per year per working adult, provided you earn anything between roughly $6500 and $100 000...which is to say, your congressman has no idea this credit existed or how important it was to you.
You probably won't really notice its passing on the bottom line, at least if your employer ran the numbers right last year. Unlike most refundable tax credits (I still hate that phrase; 'refundable tax credits' are welfare, subsidies, cash giveaways, whatever, they are nothing the hell to do with taxation other than that you claim them at the bottom of your 1040) it's paid out gradually year-round via a lowered withholding rate. It was handled in this unusual way because the Obama administration wanted to issue it as fast as possible during 2009. It lasted two years before the Republican congress you elected in 2010 killed it. Congrats! But like I said, you probably already experienced its death in the form of smaller paychecks last year. Unless you're self employed, in which case you're already fucked because....
You can no longer deduct health insurance from your income for the purposes of calculating self-employment tax. (SE tax is simply Social Security & Medicare dues made by a self-employed person, the unfair part being that they have to make both the employee and employer payments. I am convinced that this is the root cause of nearly all of the batshit conspiracy theorising about taxation in the USA; that, plus the weird intrusiveness of the whole process.)
This doesn't affect nearly as many people as the killing of MWP but those who are affected will be completely boned. The self-employed health insurance deduction went into effect only last year, I guess as a result of the Affordable Care Act - at any rate, it made it a lot easier for self-employed people to get health insurance because they could offset the cost of it against their SE tax as well as their income tax (which in most cases is a very small amount compared to SE tax, as there's no way to exclude any of your income from SE tax). No more; the Republicans are in charge now, so go die.
Those are the two most glaringly horrible things I'm seeing here. There are a few other little pinches; all the education credits have been frozen while the cost of higher education continues to go through the roof, and because they are bitching about overpayments last year it looks like claims for the American Opportunity Credit in particular will be subject to increased scrutiny; ie. if you are claiming AOC then your money may come back more slowly than you're used to, and you're at risk of getting audited. The sooner you file, the easier it's likely to go.
Good news, for them:
For 2011 there is no limit on itemised deductions and there is no exemption phaseout for people with ridiculously high incomes. Unlimited tax avoidance for everyone!
The basis of inherited property is now fair market value at the time of death. Good news for anyone who's inheriting a McMansion or anything else purchased during the credit boom and now worthless!
The Making Work Pay credit is dead. This will cost you $400 per year per working adult, provided you earn anything between roughly $6500 and $100 000...which is to say, your congressman has no idea this credit existed or how important it was to you.
You probably won't really notice its passing on the bottom line, at least if your employer ran the numbers right last year. Unlike most refundable tax credits (I still hate that phrase; 'refundable tax credits' are welfare, subsidies, cash giveaways, whatever, they are nothing the hell to do with taxation other than that you claim them at the bottom of your 1040) it's paid out gradually year-round via a lowered withholding rate. It was handled in this unusual way because the Obama administration wanted to issue it as fast as possible during 2009. It lasted two years before the Republican congress you elected in 2010 killed it. Congrats! But like I said, you probably already experienced its death in the form of smaller paychecks last year. Unless you're self employed, in which case you're already fucked because....
You can no longer deduct health insurance from your income for the purposes of calculating self-employment tax. (SE tax is simply Social Security & Medicare dues made by a self-employed person, the unfair part being that they have to make both the employee and employer payments. I am convinced that this is the root cause of nearly all of the batshit conspiracy theorising about taxation in the USA; that, plus the weird intrusiveness of the whole process.)
This doesn't affect nearly as many people as the killing of MWP but those who are affected will be completely boned. The self-employed health insurance deduction went into effect only last year, I guess as a result of the Affordable Care Act - at any rate, it made it a lot easier for self-employed people to get health insurance because they could offset the cost of it against their SE tax as well as their income tax (which in most cases is a very small amount compared to SE tax, as there's no way to exclude any of your income from SE tax). No more; the Republicans are in charge now, so go die.
Those are the two most glaringly horrible things I'm seeing here. There are a few other little pinches; all the education credits have been frozen while the cost of higher education continues to go through the roof, and because they are bitching about overpayments last year it looks like claims for the American Opportunity Credit in particular will be subject to increased scrutiny; ie. if you are claiming AOC then your money may come back more slowly than you're used to, and you're at risk of getting audited. The sooner you file, the easier it's likely to go.
Good news, for them:
For 2011 there is no limit on itemised deductions and there is no exemption phaseout for people with ridiculously high incomes. Unlimited tax avoidance for everyone!
The basis of inherited property is now fair market value at the time of death. Good news for anyone who's inheriting a McMansion or anything else purchased during the credit boom and now worthless!
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thank you so much for this post
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And I've only just now started making enough to pay actual taxes, thanks for continuing a trend of stupid.
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I. do not get. how anyone can believe that the Republicans are the low-taxes party. America has a low-taxes, small-government, balanced-budget conservative party but it's not the Republicans, it's the Democrats.
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(cry moar, kitten, is the summary of this comment, but yeah. Would've been nice.)
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DON'T YOU KNOW WE SHOULD DO EVERYTHING WE CAN TO ~REDUCE THE TAX BURDEN OF THE RICH~ BECAUSE THEY ARE THE BACKBONE OF THE AMURRIKAN ECONOMY. IF ALL THE RICH FOLKS PAYED THEIR TAXES, THEN THEY WOULD BE LESS RICH, AND THE WHOLE COUNTRY IS FUCKED!
I swear, that is the gist of the logic my father uses when...uh, discussing politics and economics.
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:(
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