SILKIN MANAGEMENT GROUP: THE NEW TAX PACKAGE: WHAT DOES IT MEAN FOR YOU?

Silkin Management Group consultants have been writing various articles over the past several weeks on our several Silkin Management Group blog sites concerning year end tax planning. One of the items that we pointed out to keep an eye on was the result of the tax package debate – would the previous Bush Era tax cuts be extended and, if so, for whom and what would they mean to our clients?

On Friday, President Obama signed into law the new tax package. Below are the key items from this package that Silkin Management Group clients and any person reading this article should keep in mind relative to year end tax planning and planning for 2011.

• The Bush Era tax cuts have been extended for two more years for all levels of income. Therefore nothing out of the ordinary needs to be done, as would have been recommended had the tax cuts not been extended. Without a higher tax rate next year, there’s no need, relative to taxes, to attempt to increase income this year.
• There will be a payroll tax cut for many tax payers. Social Security taxes will be lowered from 6.2% to 4.2%, thus putting 2% more in the pocket of income earners.
• The elimination of the “marriage penalty”, in which married couples got taxed at a higher rate than non-married couples is extended. That’s good news for married people who were penalized, tax-wise, for being married.
• The doubling of the child tax credit to $1000 per child is also extended.
• The 15% tax rate for long term capital gains will be extended. That is good news for investors.
• Businesses can write off 100% of many capital investments through 2011. As we’ve written about in previous Silkin Management Group blogs, now is the time to make investments such as buying new equipment, computers, etc., if you can afford it. The 100% write off is a huge benefit compared to the previous depreciation tables.

There are certainly many more points in the law, but the above are what we consider the key items for any Silkin Management Group client and any business owner to be aware of.

For more information about Silkin Management Group, email us at: info@silkinmanagementgroup.com or visit our website at www.silkinmanagementgroup.com

Bill Hickey
Silkin Management Group Consultant