|
Highlights
of 2001 Tax Law Changes
|
|
Following are highlights of the tax law
changes in effect for 2001, including changes made for 2001 by the
Tax Relief Act
of 2001.
|
|
|
|
|
TAX
REBATE: Tax
rebate checks to be sent to taxpayers from late July through fall
of 2001. Up to $300 for singles, $500 for heads of household and
$600 for married couples. DETAILS
|
|
|
TAX
RATES: New
10% rate bracket created and slight reduction in higher tax
brackets, reflecting the first installment of rate cuts under the
Tax Relief Act of 2001. DETAILS
|
|
|
TAX
TABLES:
New 2001 Tax Rate Tables reflecting changes made by Tax Relief Act
of 2001. DETAILS
|
|
|
CHILD
TAX CREDIT:
The tax credit for families with children under
age 17 increases to a maximum $600 per eligible child, from $500.
More lower-income parents will be able to reap benefit from the
tax break. DETAILS
|
|
|
CAPITAL
GAINS:
Lower capital gains rate for investments held more than five years
by individuals in 15 percent tax bracket. DETAILS
|
|
|
STUDENT
LOAN DEDUCTION
Up
to $2,500 in student loan interest paid in 2001 will be
deductible, up from $2,000 in 2000. DETAILS
|
|
|
RETIREMENT
PLANS
Contribution
limits have been raised for self-employed Keogh plans,
"Section 457" plans for state and local government
employees, and SIMPLE plans for employees in smaller businesses. DETAILS
|
|
|
CAR
MILEAGE
IRS
sets higher car mileage rates for business use, medical
transportation and job-related moves. DETAILS
|
|
|
"LUXURY"
CARS
The "luxury" excise tax on higher-priced cars
drops to a rate of four percent, from five percent. DETAILS
|
|
|
BUSINESS
EQUIPMENT
Self-employed
individuals and other small businesses will be entitled to
immediately write off up to $24,000 of business equipment
purchases in 2001 without having to depreciate the costs over a
period of years. The 2000 limit was $20,000. DETAILS
|
|
|
DEDUCTIBLE
IRAs
The
income-eligibility limits for traditional Individual Retirement
Accounts are raised a bit for taxpayers who are covered by an
employer retirement plan. DETAILS
|
|
|
ALTERNATIVE
MINIMUM TAX:
The AMT exemption increases by $4,000 on a joint
return to $49,000, and by $2,000 for unmarried individuals to
$35,750. DETAILS
|
|
|
EMPLOYMENT
TAXES
Higher-paid
workers will be forced to pay Social Security tax on the first
$80,400 of their job earnings in 2001, up from $76,200 in 2000. DETAILS
|
|
|
HOUSEHOLD
HELP
If you pay a housekeeper, gardener or other household helper less
than $1,300 in 2001, you won't have to pay Social Security or
Medicare taxes on behalf of the worker. The $1,300 threshold is up
from $1,200 in 2000. DETAILS
|
|
|
INFLATION
ADJUSTMENTS
As
is the case each year, the tax
brackets,
standard
deduction,
personal
exemption
, earned
income tax credit,
"kiddie
tax"
and other key elements of the tax system are adjusted for
inflation.
|
|
|
WITHHOLDING
& ESTIMATED TAXES
Tougher
rules apply to taxpayers whose 2000 adjusted gross income topped
$150,000. DETAILS
|
|
|
WORKING
OVERSEAS
For
Americans working abroad, the first $78,000 of their 2001 foreign
earnings will be exempt from U.S. income tax, up from $76,000 in
2000.
|
