By Jim Sloan
The media made it sound like the tax relief law passed late last year was designed to make a lot of older, rich taxpayers happy with new tax deductions and more favorable federal tax brackets.
But in reality, the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 contained a lot of new and extended tax deductions and benefits for those of us just starting out with our careers and businesses.
For starters, the new law included a payroll tax cut on our federal income tax that will put about $112 billion back into the paychecks of some 155 million workers. Any employee who pays into Social Security will see their portion of FICA federal income tax drop from 6.2 percent to 4.2 percent.
For the average worker, that translates into a monthly pay increase of about $83 a month. If you have been receiving the Making Work Pay tax credit, which expired at the end of 2010, your raise will be more along the lines of $50 a month. If you earn more than $95,000 a year and weren't eligible for the Making Work Pay credit, you'll get the full 2 percentage point cut from your federal income tax, or nearly $2,000 over the course of the year.
Helping parents, college students
Another important portion of the law was the extension of emergency unemployment benefits for another 13 months. That alone gives an estimated 7 million workers a little breathingRead the full article »