President Signs Tax Legislation

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President Obama has signed into law a sweeping tax bill that gives taxpayers some closure and certainty about their tax situation, at least for the next 2 years. The tax bill benefits a broad range of taxpayers by extending the current tax rates for the next two years, reinstating some expiring tax breaks, and offering longer-term help for the jobless.

Now that the dust has settled, what does this mean for you? Here are some of the changes that you should be aware of:

  • Tax Rates remain the same for 2011 and 2012: The six federal income tax rates will remain at the same levels they are today: 10%, 15%, 25%, 28%, 33% and 35%. In addition, itemized deductions will continue to be allowed in full for high-income taxpayers.
  • AMT extension: More than 20 million taxpayers will be spared from having to pay the Alternative Minimum Tax.
  • Unemployment benefits: Unemployed taxpayers get a 13-month extension of the deadline to file for additional unemployment benefits.
  • Social Security: Workers will get a 2 percentage-point break on their payroll tax for one year. Instead of paying 6.2% on wages up to $106,800, they will only have to pay 4.2% in 2011. This tax break replaces the Making Work Pay credit, which expires at the end of 2010.
  • Child Tax Credit: The bill retains the $1,000 child tax credit and reduces the minimum earnings threshold, which allows more people to claim the refundable credit (meaning you get the credit even if you owe no tax.
  • Relief of ‘marriage penalty’: The bill continues to ensure that the standard deduction for couples is exactly twice that for single filers. It also maintains an expanded 15% tax bracket so that the amount of income in that bracket for joint filers is exactly double that for single filers.
  • Expanded college credit: Paying for college tuition in 2011 and 2012 will be a bit easier with the retention of the American Opportunity tax credit, which allows a credit up to $2500.
  • Additional extensions: The legislation extends a number of tax breaks that have been introduced in the past few years such as the option to deduct on your federal return state and local sales tax instead of state and local income tax. Also, it includes a break for teachers to deduct up to $250 in classroom expenses.

There’s still time – but you’d better move quickly – to save on this year’s taxes. A few simple tips to save you money:

  • Make your home more energy efficient. Slash your tax bill by $1,500 and save money on each utility bill.
  • Donate to charity. Giving back could pay you back in terms of a bigger refund and is a great way to give back to the community.
  • Max out your retirement contributions. Some can save you bucks on your 2010 return and help your retirement nest egg grow tax free.
  • Use your flexible spending account funds. Any money you have in these accounts must be spend or lost. Over the counter drugs will no longer be eligible in 2011, so now is a good time to purchase those medications.
  • Invest in your child or grandchild’s college education by contributing to a 529 college savings plan. In some cases, these can lower your state taxes.

TurboTax is already up-to-date with these tax law changes so you can be confident you’re getting every deduction and credit to which you’re entitled. We understand these changes seem complex, but in reality, TurboTax is designed to identify all the tax breaks for you. It breaks down all these changes, asks you simple questions you can answer easily, and gets you the biggest possible refund.



87 responses to “President Signs Tax Legislation”

  1. Kimber… TurboTax makes it very easy to claim the first time homebuyer credit. With that much money at stake, you’ll certainly want to file soon.

    Bob Meighan

    VP, TurboTax

  2. I was wondering if Turbo Tax allows for the 1st time home owners tax credit of $8000 if a home was purchased by April 30th 2010? My husband and I are trying to determine if we could use Turbo Tax and still get this credit. Thanks.

  3. Kischi… State laws vary and their “comformity” with federal law and the tax changes varies widely. I can’t comment specifically on what SC does, but I can say that if you follow the TurboTax interview, the software will take care of the federal – state differences.

    Bob Meighan

    VP, TurboTax

  4. Brandon… TurboTax will easily handle your situation. In fact, I’d suggest you try TurboTax Free Edition. Good luck and welcome to the world of paying taxes!

    Bob Meighan

    VP, TurboTax

  5. Justin… You are correct in that TurboTax is up-to-date with the latest tax laws and forms. As with anyone purchasing TurboTax, you’ll need to update TurboTax for the latest tax legislation. TurboTax will prompt you when starting the program to update. Just let it do it’s thing and you’ll then be on the road to a big refund (at least I hope so)!

    Bob Meighan

    VP, TurboTax

  6. Aloha Robert,

    I am wondering, I purchased my copy of turbo tax before some new tax laws were passed regarding educational credits, i’ve read multiple times that turbo tax is up to date and current, but if i already purchased my copy and then the law changed is it really going to be able to help me via the changes in the law?

  7. I’m 17 years old my birthday is in 2 days. i have worked 2 jobs this year. i haven’t live with my mom and i want to file my own tax returns will i be able to do so?

  8. Robert… Many classes may qualify for the education credit/deduction. If you follow the TurboTax interview for education expenses, you’ll find out if you qualify. It’s worth a lot of money, so don’t miss out.

    Bob Meighan

    VP, TurboTax

  9. JT… Sorry to hear about your husband’s injury and all the related medical expenses. If there is any bright side to this, it is that you do not get taxed on workmen’s compensation. That goes right to the bank. As for your medical expenses, you can claim them as itemized deductions. TurboTax will walk you through the process of identifying tax deductions and then tell you if itemizing your deductions is better than the standard deduction.

    Bob Meighan

    VP, TurboTax

  10. Tey… You can use TurboTax without any problem. However, the IRS will likely automatically apply your 2010 refund to tax deficiencies from earlier years.

    Bob Meighan

    VP, TurboTax

  11. I owe $1000 in federal taxes & $800 in state taxes for 2009, will i still be able to use turbotax and if possible set up a payment plan for the money i owe? Or will the irs just deduct the money from my 2010 tax return?

  12. I have used Turbo-Tax for many years. My question is My husband got hurt in February and I have had to pay our health, dental, and eye insurance out of my pocket. I had to also borrow from my 401k to pay for this. I know I have to pay taxes on this from the 401k. Does my husband have to pay taxes on the workers comp he received? Can I claim having to pay for all the insurance? And can turbo tax help me this year with all the changes?

  13. my wife & I are looking at using turbo tax for the first time. does this accept married filing jointly and we both work in seperate states? i also have a child who lives with his mother, but i claim every other year. Is your system set up to handle these complex situations?

  14. Shirley… Only one version of TurboTax (for Windows) can be installed at one time on a computer. If you wish to install another version, uninstall the unwanted version and then install the one you want.

    Bob Meighan

    VP, TurboTax

  15. I have turbo tax home and business for 2010 installed on my computer, but I would like Premeir instead. Will I be allowed to have 2 turbo tax 2010 installed on my computer?

  16. Last year we claimed deductions for a farm for the first time. Can we just stop claiming these deductions, or is there a procedure to follow?

  17. CJ… I’m not sure what you mean by “I’m not in that”. If you are concerned about the possible processing delays at the IRS, still go ahead and start your return. TurboTax will tell you whether any items in your return will result in your return being delayed at the IRS. Even if it is subject to the IRS delay, filing now may allow us to send your state return on to the state so you can get your state refund in just days. About 34 states are working with us to enable us to send tax returns directly to them.

    Bob Meighan

    VP, TurboTax

  18. According to what I read from the December Law I am not in that. Should I still get my return according to the chart.

  19. Robert… CD or download is your choice. However, downloading is convenient and good for the environment. Also, downloading the 2010 will not interfere or compromise any of your 2009 stuff.

    Hope that helps.

    Bob Meighan

  20. Thanks Ashley, you cleared the 2010 version requirement for me. Is there a preference of download or CD? Also I downloaded some 2009 files yesterday. Will the 2010 replace all of those? I assume it will.

  21. Hi Robert,

    No, you need to purchase TurboTax 2010. TurboTax 2009 has tax year 2009 tax laws and forms and is only for tax returns filed for tax year 2009. TurboTax 2010 will be up to date with all current tax law changes and forms.

    Ashley

  22. I have a turbo tax copyright 2009. Can I use this for 2010 taxes? Do I have to upgrade to a version 2010? I use the automated upgrade feature with my 2009. If I buy the Deluxe version on the turbo tax website now am I just getting an updated way to get deductions. Thanks.

  23. Tom… I believe you are mixing up prices for TurboTax Online vs. TurboTax CD/Download. They are priced differently because they are packaged differently. Go here for a comparison: http://turbotax.intuit.com/personal-taxes/. (I suspect you are using TurboTax Online.) If you’re comparing the difference in cost between the CD version (Premier vs. H&B), we are $10 different, just like Costco. Looking at the Online price, however, the difference is $25 because you’re also starting from a much lower base price. Does this explain the difference?

    Bob Meighan

    VP, TurboTax

  24. I purchased Turbo Tax Premier and need TurboTax Home and Business. When being prompted by Turbo Tax stating I should upgrade, I can upgrade for $40 – however the purchase price is difference is as low as $10 (Costco), or $25 at the Turbo Tax site. Why is Turbo Tax wanting to charge me more to upgrade than the difference in the product – not exactly a way to keep a customer (especially for an electronic download with no media).

  25. “I received money from both my employer and Tx workman’s comp due to a temp disability. Is this money tax free and/or included in filing?”

    Workmen’s compensation is not considered taxable income if it’s for a job related sickness or injury. Money received from your employer is taxable.

    • Excellent goods from you, man. PSA Public Service Announcment: IRS & You | Money Mend I have understand your stuff eovpirus to and you’re just extremely excellent. I actually like what you’ve acquired here, certainly like what you’re saying and the way in which you say it. You make it entertaining and you still take care of to keep it wise. I can’t wait to read far more from you. This is actually a tremendous PSA Public Service Announcment: IRS & You | Money Mend informations.

  26. I received money from both my employer and Tx workman’s comp due to a temp disability. Is this money tax free and/or included in filing?

  27. I am needing to know if TurboTax is up-to-date with all the most recent tax codes as of 1/14/11 that were recently signed into legislation. Am I guaranteed that if I use TurboTax today, that I would be receiving all the latest information to be abiding by the most current tax code.

  28. I am a doctor working and living in a foreign country. I pay income tax to this treaty country. does the form 1116 keep me from having to pay taxes in the U.S. income tax since the taxes are high in this country ?

  29. Why was my return lower than last year being that i paid in almost $1500 more? I am still in the same tax bracket.

  30. TurboTax gave a user ID and I put in a password. Now I can’t access the account I started. I use the Id and when I enter the password I’m told it isn’t valid. When I ask for help I get nowhere. Do I have to start all over again?

  31. I know this is probaly not for this website but I’ve not received anything from you so far is there a reason for the delay? usually your sending something already to stell me to start ny return. I’ve used your serve for a few years now.

    Thanks in return.

  32. I started an S Corp. last year. Can i file both personal and business return together or do i have to file two seperate returns.

  33. last year when using turbotax I was unable to download updates and was getting error messages Called 3 times to have update cd mailed to me and received none also was unable to e-file as I could not get the updates prior to attempting to e-file IF I use turbotax for 2010 will I be able to get the updates this time and e-file was not happy having to mail in the tax forms kindly respond to this note as you did not to my past e-mails and phone calls

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