Although it seems like we already cut a pretty good share of income from our paychecks to satisfy federal income tax demands, most of us had better brace ourselves for a rise in our 2011 federal tax returns as the federal deficit is on track to hit new highs.
Many tax cuts enacted by President Bush in 2001 and 2003 are set to expire in 2010. These cuts were designed to help all income levels: America's low-, middle-, and higher-income workers. The Tax Foundation summarized some of the major changes to the tax code during the last decade:
- lowered key federal tax brackets (28% to 25%, 31% to 28%, 36% to 33%, 39.6% to 35%) and created the 10% federal tax bracket
- doubled the child tax credit to $1,000 per child
- made more married couples eligible for the earned income tax credit (EITC) and raised the standard deduction for joint filers
More Uncertainty Than in Years Past
As the United States budget deficit hits astronomical levels, we have good cause to worry about what "paying our fair share" means. Usually, a number of tax provisions are legally tied to inflation--and as there's not been too much of that lately, you might think the projected tax provisions won't move much.
That was the case for the 2010 income tax bracket projections. But for 2011, the triple whammy of the deficit, the recession, and scheduled expirations to previous tax code changes makes for some uncertainty. As of this writing,Read the full article »