Release notes for version 13.01, December 17,
This release of the software updates the start year for new files to be
2011. It also includes all provisions of the Tax Act passed in Congress
on December 16, 2010.
As of the date of this release, the IRS has not released official
numbers for inflation-updated values such as the standard deduction, the
exemption amount, tax brackets, and so on. We have used our estimates of
these amounts, based on changes in the consumer price index from
November 2010 to October 2011. We will update the software as soon as
the IRS releases the official numbers.
Here are the other enhancements in this release:
Changes for Tax Act of 2010
Here are the changes under the 2010 tax act:
Tax brackets and rates. The Bush tax cuts have been extended
Lower tax rates than in the Clinton years.
Different tax brackets than in the Clinton years.
Dividends continue to be treated as capital gains.
The lower top capital gains rate: 15% vs 20% is still in effect.
The lower bottom capital gains rate: 0% vs 10% is in effect.
We have also added an option to extend the date of
these changes beyond 2012 for your calculations. This is on the
Tax exemptions. There will not be any phase-out of the deduction
for tax exemptions until 2013. At that time, the phase-out is scheduled
to return, starting at the 2001 threshold, adjusted for inflation since
then, which will probably be around $175,000 for single individuals.
Phase-out of Itemized Deductions. Most Itemized deductions are
phased out in an amount generally equal to 3% of the amount by which
Adjusted Gross Income exceeds a threshold. The phase-out did not apply
in 2010. For 2011 and 2012, the phase-out will not apply either. It will
return in 2013.
FICA tax. The employee’s portion of the FICA tax rate is 4.2% for
2011 only. We have also added an option to extend the date. For
self-employment tax, the overall rate is reduced by 2%. This option is
on the Assumptions screen.
Alternative Minimum Tax. For years, Congress has been delaying a
reversion of brackets that would have the effect of restoring a higher
level of AMT. This delay is continued through 2012. We have also added
an option to extend the date. This is on the Assumptions screen. If you
have currently specified that this will be delayed (an option that was
available on the View/Edit Taxes screen), then this release will convert
that specification to a delay-through date of 2070. You may change that
on the Assumptions screen.
American Opportunity tax credit. This enhancement to the Hope
Credit has been extended through end of 2012.
Child Tax Credit. The credit is continued at the level of $1,000
per qualifying child under the age of 17 for two more years (2011 and
2012). Then it will revert to $500 per qualifying child under the age of
Child Tax credit refundability threshold. The refundability
threshold is set at a level of earned income of $3,000 for 2011 and
2012. This is a continuation of the Obama tax provisions that originally
set this at $3,000 for just 2009 and 2010. The lower threshold makes
more of the child tax credit refundable.
Child Care Credit. The dependent care credit allows a taxpayer a
credit for an applicable percentage of child care expenses for children
under 13 and disabled dependents. The Bush Tax Act increased the amount
of eligible expenses from $2,400 for one child and $4,800 for two or
more children to $3,000 for one child and $6,000 for two or more
children. The Bush Tax Act also increased the applicable percentage from
30 percent to 35 percent. The new law extends the changes to the
dependent care credit made by the Bush Tax Act for an additional two
years, through 2012.
Earned Income Credit. Historically, the EIC has treated all
families with 2 or more children the same. In 2009, the EIC was expanded
to have an additional bracket for families of 3 or more children, for
just 2009 and 2010. This is continued for 2011 and 2012. Also, for
married couples, to help combat the "marriage penalty," the start and
end of the phase-out range for the EIC is increased by a certain amount.
This has the effect of increasing the amount of the credit. In 2008,
this increase in the phase-out thresholds was $3,000. In 2009, the Obama
tax bill increased it to $5,000, but just for 2009 and 2010. This bill
continues this increase for 2011 and 2012. The $5,000 is adjusted for
inflation, and is currently around $5,010.
Student Loan Interest. Certain individuals who have paid interest
on qualified education loans may claim an above-the-line deduction for
such interest expenses up to $2,500. Prior to 2001, this benefit was
only allowed for 60 months and phased-out for taxpayers with income
between $40,000 and $55,000 ($60,000 and $75,000 for joint filers). The
Bush Tax Act eliminated the 60 month rule and increased the income
phase-out to $55,000 to $70,000 ($110,000 and $140,000 for joint
filers), increased by inflation every year since then. The new law
extends the changes to this provision for an additional two years,
Alimony. It is now possible to enter alimony as a % of wages
IRA/401(k). On the Lawyer tab “more info” screen for an IRA/401k
asset, you may now specify a growth rate for the IRA account. The
default is 5%.
Pennsylvania Child Support.
Guideline worksheet. In the calculation of alimony pendent lite
where there are no children, we now use all adjustments, incuding health
insurance, not only the mortgage interest adjustment.
Guideline worksheet. If you manually enter 182.5 as the number of
overnights, the guideline worksheet will now show 50%. Previously, it
was showing 50.14%, because we rounded 182.5 to 183 before dividing by
New Jersey Child Support.
Other Dependent Deduction. In calculating the Other Dependent
Deduction, we now continue the hypothetical child support calculation
for the “other dependent” child through line 13. We have added more
pop-up help to these lines on the data entry screen.