2001 Income Tax Update
The following important changes have been made for 2001 to the income
tax laws
Tax rates and brackets - The 2001 Tax Act created a new 10% bracket
that will be included in the tax tables for 2002 and later years. for 2001, the benefit of the 10% bracket was given to the taxpayers through the advance payment checks mailed out by the IRS or is available as a rate reduction credit claimed on your 2001 tax return. THIS IS WHY WE MUST VERIFY THAT YOU RECEIVED YOUR 2001 TAX REBATE.
The standard deduction has increased to $4,550 for singles, to $6,650 for
heads of household, to $3,800 for married persons filing separately and to $7,600 for joint returns and qualifying widow(er)s.
The personal exemption deduction is $2,900 (up from $2,800) subject to
the phase-out rules for high income taxpayers.
First year depreciation (section 179) has increased on business equipment
placed in service in 2001 to $24,000 up from $20,000 in 2000.
The child tax credit is increased $100 to $600. Again this is subject to
phase out for high income taxpayers.
The AMT exemption has increased in 2001 to $49,000 for married
taxpayers, $35,750 for single and head of household taxpayers and $24,500 for married persons filing separately. These new exemptions will remain in place through 2004 as the law presently stands.
VERY IMPORTANT- If the name and social security number of a spouse on a
joint tax return does not match Social Security Administration records, a personal exemption for that spouse is generally disallowed. If you fall into this catagory, contact social secuiryt and get form SS-5. The SSA website is www.ssa.gov or call 1-800-772-1213.
For 2001 the business milegate rate is 34.5 cents per mile
For 2001 maximum student loan interest deductible is $2,500 (up from
$2,000).
Self employment earnings up to $80,400 are subject to self employment
tax, this is up from $76,200 for 2000.
The estimated tax safe harbor is now 112% of the prior year's tax
compared with 110% for the year 2001. |