By Laurie Valentine- COO & Trust Counsel
The standard mileage rates for use of a car, van, pickup or panel truck have not changed: 55 cents for business miles; 23 cents per mile for medical or moving expense deductions; and 14 cents per mile driven in service of charitable organizations.
The 2011 payroll tax cut that reduced the Social Security withholding rate from 6.2 percent to 4.2 percent of wages has been extended by Congress until February 29, 2012.
The payroll tax cut extension includes a new “recapture” provision for employees who receive more than $18,350 in wages during the two-month extension period. A 2 percent additional income tax is imposed on the portion of such employees’ compensation earned during the period that exceeds $18,350. This is an add-on to the employee’s general income tax liability and not subject to reduction by credits or deductions.
The personal and dependent exemptions increased $100 and the standard deduction increased for all filers: $300 for married couples filing jointly; $150 for singles and married individuals filing separately; and $200 for heads of household. Tax bracket thresholds also increased for each filing status.
The unified credit against federal estate and gift tax increased to $5,120,000 from $5,000,000. The new credit amount is available to estates of those dying in 2012 and for gifts made during 2012.
One federal benefit that was not extended is the IRA Charitable Rollover which permitted gifts of up to a total of $100,000 each year directly to qualified charitable organizations from the giver’s IRA. It expired December 31, 2011.
The information in this article is provided as general information and is not intended as legal or tax advice. For advice and assistance in specific cases, you should seek the advice of an attorney or other professional adviser.