subject: Factoring Companies Factoring Support 2010 Tax Debts [print this page] Factoring Companies Factoring Support 2010 Tax Debts
Many small businesses know it is time to think about 2010 year-end taxes. And this year, there may be more than a few changes to the 2010 and 2011 federal income taxes.Unfortunately, even given the economic situation in the United States, taxes are scheduled to increase next year, so you may want to think carefully before incorporating the concept of deferring without the proper analysis of any associated risks.Recent tax breaks are slated to phase out in 2010, which means there are a number of tax changes that are already being incorporated into law.To be prepared, you may want to think about looking for a factoring company so you can start factoring your company's invoices in the new year, to save the funds to support these new laws.Following are just a few of the proposed federal income tax changes.Increasing Federal income tax rate facts include:- So, the 10 percent rate will retire on Dec. 31, 2010, and in 2011, all other rates revert to the pre-2001 levels: 15, 28, 31, 36, and 39.6 percents. The Federal administration has proposed extending the current rates, allowing only the top two rates to revert to 36 and 39.6 percent for taxpayers with income over $200,000 -- for single filers (SF) and over $250,000 for those who are married and filing jointly (MFJ).
- Limited itemized deduction and personal exemptions -- overall limitation on itemized deductions and the personal exemption phase-out (PEP) returns in 2011 after being gone in 20101. Itemized deductions must be reduced by 3 percent of excess MAGI over the applicable threshold but by no more than 80 percent of itemized deductions. The applicable threshold amount for 2009 was $166,800 and the amount for 2011 will soon be released by the Treasury.- Long-term dividend tax increases and long-term capital gains (LTCG) -- qualified dividends are tax-free for those subject to the 10 and 15 percent income tax rates and all others are subject to a 15 percent rate. But don't forget a special 28 percent applies to antiques and works of art, which are considered collectables.- The LTCG rates of 0 and 15 percent will be replaced in January 2011 with 10 and 20 percent and dividends will be taxed as ordinary income. The five-year qualified-gain rules will resurface -- meaning, property held for more than five years that would have been taxed at the 10 and 15 percent LTCG rates will be taxed at discounted rates of 8 and 18 percent.- The new Medicare surtax is 3.8 percent, and it is scheduled to go into effect in 2013 on the lesser of net investment income, or modified adjusted gross income (MAGI) - but that's in excess of $200,000/ $250,000 (SF/MFJ).- Alternative minimum tax increases -- the higher 28 percent alternative minimum tax (AMT) rate applies to AMT income in excess of $175,000. The AMT exemption amounts for 2010 and 2011 stay the same$33,750/ $45,000 (SF/MFJ)and phase out entirely when the AMT income exceeds $247,500/$330,000 (SF/MFJ).- If you are married you will be penalized -- as married taxpayers beginning in 2011, will pay 167 percent of the single-filer bracket top when filing jointly. Nowadays married couples enjoy a standard deduction and a 15 percent income tax rate bracket top that are 200 percent as high as that of those who are single filersa; $5,700/$11,400 (SF/MFJ) standard deduction and a 15 percent bracket top of $34,000/$68,000 (SF/MFJ). The administration has proposed locking in the 200 percent rate for the future. This could be the time when those who are in business for themselves begin to think about factoring, to come up with the difference in cash outlay.- When it comes to the future -- the Federal administration wants to increase the applicable threshold to $200,000/$250,000 (SF/MFJ). And they also proposed to cap the benefit of itemized deductions at 28 percent. Specific itemized deductions are and will remain exempt from phase-out including medical expenses, casualty, theft and wagering losses, and investment interest expenses.By the year 2013 medical expenses may only be deducted when they exceed 10 percent of the adjusted gross income (AGI) of the taxpayer.
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