|
Useful
Income Tax and Retirement Planning Information
There
have been several major tax law changes over the past few years with staggered
effective dates. These laws have
significantly changed the way you may want to consider your financial
situation, especially retirement planning. Here is some information that you find helpful:
2011
Income Tax Information
The
Income Tax Rates for 2011
|
2011
Single Return Rate Schedule
|
|
2011
Married Filing Jointly Rate Schedule
|
|
Taxable
income levels
|
Tax
rate
|
|
Taxable
income levels
|
Tax
rate
|
|
0
to $8,500
|
10%
|
|
0
to $17,000
|
10%
|
|
$8,501
to $34,500
|
15%
|
|
$17,001
to $69,000
|
15%
|
|
$34,501
to $83,600
|
25%
|
|
$69,001
to $139,350
|
25%
|
|
$83,601
to $174,400
|
28%
|
|
$139,351
to $212,300
|
28%
|
|
$174,401
to $379,150
|
33%
|
|
$212,301
to $379,150
|
33%
|
|
Over
$379,150
|
35%
|
|
Over
$379,150
|
35%
|
2011
Standard Deduction
Married couples filing a joint return - $11,600
Single return filers - $5,800
Taxation
of Dividends and Long Term Capital Gains
For
taxpayers in the 10% and 15% brackets, qualifying dividends and long term
capital gains (assets held for more than a year) will be taxed at 0% for
2011. For those in higher tax brackets,
the special tax rate is 15%.
The
preferential tax treatment of dividends is scheduled to expire at the
end of 2012 and the top rate on long term capital gains is scheduled to
rise to 20%.
Estate
Taxes
|
Year
|
Estate
Size Where Taxation Starts
|
Top
estate tax rate
|
|
2009
|
$3,500,000
|
45%
|
|
2010
|
No
estate taxation
|
|
|
2011
|
$5.000,000
|
35%
|
|
2012
|
$5.120,000
|
35%
|
|
2013
|
Reinstatement
of old (2001) rates with estates over $1,000,000 being taxed
|
55%
|
Many believe the estate
tax rules will be changed before the rules revert to the old ones in 2013.
Regular
IRA and Roth IRA Contribution Limits
|
For
tax year
|
IRA
contribution limit
|
Additional
contribution limits for those age 50 and over
|
|
2011
|
$5,000
|
$1,000
|
|
2012
|
$5,000
|
$1,000
|
401(k)
Retirement Plan Contribution Limits
|
For
tax year
|
401(k)
deferral limit
|
Additional
contribution limits for those age 50 and over
|
|
2011
|
$16.500
|
$5,500
|
|
2012
|
$17,000
|
$5,500
|
Coverdell
Education Savings Accounts (Education IRAs)
The
annual limit is now $2000.
Annual
Gift Tax Exclusion
Gifts of $13,000 and under are not subject to gift tax.
Social
Security
2012 Employee wages subject to Social Security tax of 4.2% -
$110,1800
2012 Employee wages subject to Medicare tax of 1.45% - no limit
2012 Self employment income subject to Social Security tax of 10.4% -
$110,000
2012 Self employment income subject to Medicare tax of 2.9% - no limit
2012 Average monthly benefit for all retired workers - $1,229
2012 Average monthly benefit for retired couples - about $1,994
2012 Maximum monthly benefit for a worker at full retirement age - about
$2,513
Note
- For 2011, Social Security tax rate for workers was 4.20% and was scheduled
to revert to 6.20% for 2012. In late December, 2011, the 4.20% rate for
workers was extended until the end of February, 2012. Congress is expected
to visit this rate in early 2012 and possibly extend the lower rate for
an additional time. The rates above assume the 4.20% rate for employees
is extended for all of 2012.
|