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Stimulus Tax Benefits
Following are some of the benefits available under recent legislation.
Capital gain and dividend tax rates – Long term capital gain tax rates of 15% have been extended through 12/31/2012. This rate also applies to qualified dividends received through 12/31/12.
Education cost credits - The HOPE credit has been enhanced through 2012. A credit is now available up to $2500 for tuition, fees and materials paid for the first four years of college. The AGI phase out range has been increased to $80,000 to $90,000 Single and $160,000 to $180,000 joint.
Energy credits (IRC section 25D) – This credit of 30% of the cost applies to qualified solar electric property, qualified solar water heating property, qualified small wind energy property, and qualified geothermal heat pump property. There is no limitation on this credit. The manufacturer of the property should be able to provide a certification that the property qualifies for the tax credit. Costs allocable to swimming pool or hot tubs are not eligible.
Sale of small business stock – For stock acquired after 9/27/10 and before 1/1/2012, no capital gain tax will be incurred upon the sale of small business stock that is held for more than 5 years. This treatment applies only to qualified small business stock. The issuing corporation must be a domestic C corporation.
Bonus depreciation – For 2011, the bonus depreciation allowed is 100% of the cost of qualifying property. This applies to non real estate property which is new.
Section 179 deduction – This applies to new or used non real estate property purchased for use in a trade or business. For 2011, up to $500,000 can be deducted in the year of purchase. This deduction begins to phase out if total property acquired exceeds certain limits.
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IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that, except as may be expressly stated herein to the contrary, any U.S federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (a) avoiding penalties under the Internal Revenue Code or (b) promoting, marketing or recommending to another party any transaction or matter addressed herein.