What Was Missing
With great fanfare, and a giant love fest of political cooperation, Congress passed, and the President signed, the Job Creation Act of 2010. Much has been made about the extension of tax breaks, and some have been written about the temporary estate tax provisions, but I haven’t read anything about what was missing. Here are a few things that were noticeably absent from the law:
Real Estate Taxes
The old law allowed individuals that didn’t itemize their deductions to take up to an additional $1,000 (married) deduction for real estate taxes paid. For most of the metro areas in the country, this was no big loss, but in Oklahoma, where mortgages and taxes are lower, fewer people itemize. Average cost to Oklahoma taxpayer= $210
Exclusion of Unemployment Benefits
The old law allowed an individual to receive the first $2,400 of unemployment benefits without paying taxes. No longer. Unemployment benefits were extended under the new law, but are fully taxable from dollar one. Cost to average Oklahoman receiving benefit= $384.
Motor Vehicle Taxes
The old law allowed an itemized deduction for qualified motor vehicle taxes. Additionally, individuals using the standard deduction were allowed to deduct the motor vehicle taxes. No more. Average tax cost to Oklahoman= $252.
Health Insurance for Self Employed
Under the old law, a self-employed individual could deduct the cost of health insurance for themselves, spouse, and dependents for purposes of calculating the self-employment tax. Now the deduction reverts to the previous method of only allowing the deduction for regular income tax purposes. Cost to average self-employed Oklahoman with a family of 5=$900.
As expected, the IRS closed the loop on a potential loophole in the new health care credit. In final regulations issued, a shareholder’s family cannot take the credit for health insurance premiums. No real surprise here, but noticeably absent from the regulations is the discussion of the family of self-employed individuals…
Of course, Congress can change the law anytime, and God knows they have done a lot of it in the last few years. These provisions appear to be dead, however, and probably won’t be reintroduced.
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