If you install renewable-energy equipment, such as solar panels in the primary residence or vacation home by the end of the year, you can claim a credit for 30% of the cost, including installation, with no limit. This credit is good through 2016.
Friday, September 16, 2011
Thursday, September 15, 2011
Payroll tax holiday
The payroll tax, also known as FICA, is split evenly between employees and employers. Employees pay 6.2% and employers pay the other 6.2% for a total of 12.4% for social security, plus a 2.9% medicare tax, split 1.45% to employers and 1.45% to employees. For self-employed, the FICA is also referred as the Self-Employment tax, SE tax. The employer's share of the FICA taxes, 7.65% is deducted in the tax return.
After the expiration of 'Making Work Pay Credit' in December 2010, in order to continually boost the amount of money people pocket in their paychecks, for 2011, congress has reduced the social security tax by 2% for employees. Therefore, self employed will pay SE tax at a rate of 13.3% instead of 15.3%, with the same 7.65% deductible with the tax return.
President Obama's new proposal gives even more cuts for both employees and employers. The proposal will cut the social security tax in half for both employers and employees, it will be 3.1% instead of 6.2% each. The employer's cut is limited to the first $5 million of a firm's payroll.
Social Security tax Medicare tax
-----------------------------------------------------------------------------------------
employer employee employer employee
-----------------------------------------------------------------------------------------
2010 6.2% 6.2% 1.45% 1.45%
-----------------------------------------------------------------------------------------
2011 6.2% 4.2% 1.45% 1.45%
-----------------------------------------------------------------------------------------
President Obama's proposal:
3.1% * 3.1% 1.45% 1.45%
* to the first $5 million of the payroll
After the expiration of 'Making Work Pay Credit' in December 2010, in order to continually boost the amount of money people pocket in their paychecks, for 2011, congress has reduced the social security tax by 2% for employees. Therefore, self employed will pay SE tax at a rate of 13.3% instead of 15.3%, with the same 7.65% deductible with the tax return.
President Obama's new proposal gives even more cuts for both employees and employers. The proposal will cut the social security tax in half for both employers and employees, it will be 3.1% instead of 6.2% each. The employer's cut is limited to the first $5 million of a firm's payroll.
Social Security tax Medicare tax
-----------------------------------------------------------------------------------------
employer employee employer employee
-----------------------------------------------------------------------------------------
2010 6.2% 6.2% 1.45% 1.45%
-----------------------------------------------------------------------------------------
2011 6.2% 4.2% 1.45% 1.45%
-----------------------------------------------------------------------------------------
President Obama's proposal:
3.1% * 3.1% 1.45% 1.45%
* to the first $5 million of the payroll
Wednesday, September 14, 2011
Energy Credit
Last year, I asked my clients to purchase and install energy efficient improvements by 12/31/10. If you have not yet done so, there is a modified energy credit available for 2011.
In 2009 and 2010, there was a nonrefundable credit for 30% of costs for qualifying residential improvements for heating and cooling efficiency (e.g., windows, doors, installation, and heating and air conditioning systems) up to $1,500 collectively for 2009 and 2010.
For 2011, the credit was reduced to 10% of cost of qualifying purchases up to $500 lifetime credit ($200 for windows). The extended tax credit is in effect for all qualifying systems and products installed during the 2011 calendar year and expires on December 31, 2011.
To see what products are eligible, visit the web site: http://www.energystar.gov/taxcredit
In 2009 and 2010, there was a nonrefundable credit for 30% of costs for qualifying residential improvements for heating and cooling efficiency (e.g., windows, doors, installation, and heating and air conditioning systems) up to $1,500 collectively for 2009 and 2010.
For 2011, the credit was reduced to 10% of cost of qualifying purchases up to $500 lifetime credit ($200 for windows). The extended tax credit is in effect for all qualifying systems and products installed during the 2011 calendar year and expires on December 31, 2011.
To see what products are eligible, visit the web site: http://www.energystar.gov/taxcredit
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