The Tax Relief/Job Creation Act Of 2010 - How It May Affect Your 2010 Taxes And Your 2011 Paycheck

With the passage of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, certain expiring tax cuts have been extended for all taxpayers through the end of 2012. Some of these cuts include the extension of the 15 percent long-term capital gains rate, the $1,000 per child tax credit, and the American Opportunity credit, which offers tax breaks for college students.


There are also new items in this bill that will benefit taxpayers.


Social Security taxes for employees will be cut by 32 percent, going from 6.2 percent to 4.2 percent for 2011. This means that a taxpayer earning $50,000 in wages would save $1,000 over the course of the year, and a worker earning $100,000 would save $2,000.


This bill also includes an estate tax that allows the first $10 million of a married couple’s estate to pass, without taxation, to their heirs. Any amount over the combined $10 million exclusion would be subject to a tax rate of 35 percent.


The bill also extends benefits to the unemployed up to an additional 13 months, through 2011.