2011 Tax Hikes

Tax hikes are on the way. Not right away, during the current economic downturn, but in 2011, when Obama figures the economy will have recovered.
The targets: High incomers and businesses.
Higher tax rates for upper incomers. Reinstating the 36% and 39.6% income tax brackets for married filers making over $250,000 and singles who make more than $200,000, beginning in 2011. In essence substituting 36% and 39.6% tax rates for the current 33% and 35% tax brackets. Lower brackets would not be affected.
Regarding Capital gains and dividends the current 15% maximum rate would rise to 20% for filers who are above the 28% tax bracket, effective in 2011.
Continued phase outs of personal exemptions and itemized deductions. Set to lapse after 2009, both of these will be reinstated by Obama beginning in 2011, but only for taxpayers who are in the two highest tax brackets.
The 2010 Medicare Part B premium is projected to rise to $104.20 a month. This will mainly affect upper incomers … married with AGIs above $170,000 and single over $85,000, who pay a stiff surtax on top of the basic Part B premium.
After-tax payins to a 401(k) plan can be converted to a Roth IRA tax free.
The after tax contributions can be pulled out in a lump sum and rolled over to a Roth IRA without triggering an income tax bill. This is a much more liberal rule than when converting an IRA with after – tax payins to a Roth IRA. In that case, only a portion of the amount rolled over will be tax free, based on the ration of your nondeductible contributions to the total in all your IRAs.
Real estate agents can claim a special tax break on their rental losses. Their losses are exempt from the passive loss rules. But the exemption applies only to agents who spend more than half of their time and at least 720 hours per year materially involved in real estate… the same rule that applies to landlords, developers and brokers.