The House and Senate voted today to extend the payroll tax cut and unemployment benefits, while also avoiding a Medicare fee cut for doctors for the rest of the year. President Obama has promised to sign the legislation, which means Americans will continue to receive bigger paychecks through the rest of the year.
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Social Security benefits are taxed depending on your total income from all sources. Here is how to calculate how much of your Social Security benefits is taxable.
Provisional Income
Provisional income is your total worldwide income, including tax-exempt income, plus half of your Social Security benefits.
Base Amounts
The following base amounts are used in figuring your taxable Social Security:
| Filing Status | Base | Additional |
| Single | $25,000 | $34,000 |
| Head of Household (HH) | $25,000 | $34,000 |
| Married Filing Jointly (MFJ) | $25,000 | $34,000 |
| Qualifying Widow(er) | $25,000 | $34,000 |
Taxable Social Security Benefits
- If your provisional income is below the base amounts for your filing status, then your Social Security benefits are not taxable.
- If you provisional income is between the base amount and the additional amount, then 50% of your Social Security benefits over the base amount are taxable.
- If your provisional income is over the additional amount, then $4,500 (or $6,000 if Married Filing Jointly) plus 85% of your Social Security benefits over the additional amount are taxable.
- The taxable portion of your Social Security benefits cannot exceed 85% of your total benefits.
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The Senate does not like the idea of a value-added tax, which would be similar to a national sales tax.
The Senate voted 85-13 Thursday to pass a nonbinding “sense of the Senate” resolution that calls the value-added tax “a massive tax increase that will cripple families on fixed income and only further push back America’s economic recovery.”
The issue came up because White House adviser Paul Volcker told a group in New York last week that taxes might have to be raised to bring budget deficits under control. He added that the value-added tax “was not as toxic an idea” as it had been in the past.
New Mileage Rates for 2010
If you drive a car, truck or van for work, you’ll want to make sure you know the standard mileage rates that the Internal Revenue Service (IRS) has set for 2010. And remember, these mileage rates are not just used to calculate deductible costs for driving an automobile for business, but also for charitable, medical or moving purposes.
New for 2010
As of January 1, 2010, the standard mileage rates are as follows:
- Businesses = 50 cents per mile driven
- Medical or moving = 16.5 cents per mile driven
- Charitable organizations = 14 cents per mile driven
Note: The 2010 rates are slightly lower than last year’s, due to generally lower transportation costs as compared to a year ago.
Make Sure You Qualify
Before you calculate your deduction, make sure you qualify. The IRS reminds taxpayers that they cannot use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for any vehicle used for hire or for more than four vehicles used simultaneously.
Additional Option
Although the IRS provides the standard mileage rate for ease and convenience, you’re not required to use it. If you prefer, you can calculate the actual costs of using your vehicle instead of using the standard mileage rates.
Most people find that they save money on taxes by working with a tax processional. Contact Tax Advisors if you need any help!
In 2009 and 2010, the Making Work Pay provision of the American Recovery and Reinvestment Act will provide a refundable tax credit of up to $400 for working individuals and up to $800 for married taxpayers filing joint returns.
This tax credit will be calculated at a rate of 6.2 percent of earned income and will phase out for taxpayers with modified adjusted gross income in excess of $75,000, or $150,000 for married couples filing jointly.
For people who receive a paycheck and are subject to withholding, the credit will typically be handled by their employers through automated withholding changes. These changes may result in an increase in take-home pay. The amount of the credit will be computed on the employee’s 2009 income tax return filed in 2010 and the employee’s 2010 tax return filed in 2011. Taxpayers who do not have taxes withheld by an employer during the year can also claim the credit on their 2009 and 2010 tax returns.
It is not necessary to do anything to get the automatic withholding change. However, an employee with multiple jobs or a married couple whose combined income places it in a higher tax bracket should consult the IRS withholding calculator and, if necessary, submit a revised Form W-4, Employee’s Withholding Allowance Certificate, to ensure enough tax is withheld. Publication 919, How Do I Adjust My Tax Withholding? provides additional guidance for tax withholding including a special Making Work Pay worksheet.
Read more @ http://www.irs.gov/newsroom/article/0,,id=204447,00.html
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