Tax Laws used in version 2.18.23
What are the tax laws in 2.18.13? Do they have the Bush tax cuts continuing until 2013?
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In 2.18.13 we followed the CBO's projection that the Bush tax cuts would be repealed for high-income households. So we have higher rates (the ones the CBO projected) for high income households starting in 2011. In our Feb. release we will start those higher rates in 2013 and also add in the one-year payroll tax cut for 2011. We also have the new Medicare taxes in 2.18.13, which were passed as part of the health reform bill last Winter. They kick in after 2013. best, Larry
Larry,
The health care reform bill (Sec. 3402.) also temporarily freezes the thresholds for determining the income related monthly adjustment amounts for Medicare Part B premiums at the 2010 level of $170,000 etc. for the period of 2011 through 2019. This means that more people will exceed the means test as AGI grows with inflation. It looks like ESPlanner defaults to $175,100 (1.03*$170,000) etc. in 2011 and further inflates thresholds in out years.
Also, Medicare Part B premiums are not held-harmless for beneficiaries who are required to to pay an income-related monthly adjustment amount (Federal Register/Vol. 75, No. 216/ Tuesday, November 9, 2010/ Notices, page 68792). It looks like ESPlanner implements the hold-harmless provision in this case.
Increased Medicare Part B premiums due to means testing and the loss of hold-harmless provisions could make Roth conversions more attractive for some as a way to lower AGI between 2011 and 2019, thereby avoiding those premium increases.
Will the February release incorporate these changes?
While we're on the topic of taxes, will the recently enacted IL state tax changes be incorporated in the February release?
Joe
Generally speaking, we put ONLY tax information that the state and federal governments actually publish in tax forms. There are a couple of exceptions to this but only with the federal government. We don't chase future state tax regulations simply because we're still not big enough to dedicate the type of resources necessary to do a through job.
Best,
Dick Munroe
It's actually not a future change. It was passed by the lame duck legislature, signed by the governor and is effective January 1, 2011.
The personal income tax rate is increased from 3% to 5% between January 1, 2011 and December 31, 2014. The rate will revert to 3.75% from January 1, 2015 to December 31, 2024. The rate will then reduce to 3.25% starting on January 1, 2025. I wouldn't bet on the reductions ever occurring, but that's the current law. I expect the tax forms to be amended and available shortly.
Joe