First, the alternative minimum tax, was patched so that middle income senior citizens are not caught paying an incremental tax bill. For 2010, the AMT exemption amounts will be $47,450 for unmarried individuals and $72,450 for married individuals filing jointly. For 2011, the amounts will be $48,450 and $74,450, respectively.
Next, the bill extends the benefit of senior citizens using IRA funds to make charitable donations. Seniors age 70½ and older can continue to contribute up to $100,000 directly from their IRAs to charity. The IRA charitable withdrawal isn't deductible, but it is not included in taxable income for the year. This is a very significant advantage to most senior citizens whose tax on social security and health expense deduction depend on keeping their reported income down.
The withdrawal counts toward the IRA owner's required minimum distribution — the amount retirees age 70½ or older are required to withdraw every year.
If you have already taken a distribution from your IRA in 2010, you cannot use the provision to give to charity. But if you haven't taken your 2010 required minimum distribution, you have until Jan. 31, 2011 to make a contribution directly to charity and have it count toward your 2010 required minimum distribution.
Last, there is a break on estate taxes, an issue of concerns to senior citizens who may have significant estates. Rather than the $1 million exemption and 55% rate that would have applied to estates for 2011, the new law reduces these factors to an estate tax rate of 35% and an estate tax exemption of $5 million ($10 million for couples with proper estate planning).
So even though senior citizens can lament the fact they won't get an increase in 2011 social security benefits, they did pretty well with this Congress.
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Its heartening to note the increase in the Exemption amounts. The extension time given until Jan 31 2011 for donations will be a great help for persons like me who haven't yet done it for 2010.
Reduction in Estate tax rate by 20% is great news and I'm sure a large number of senior citizens would benefit.
Thanks for the great info.. keep it coming.
Php Development says
Pension is the only hope for old people anf by this decision they are gonna be very happy ...
Sounds like good news for Senior Citizens for 2010.
Internet Business Blog says
I think the estate tax is a complete disgrace... it's just plain robbery on the part of our government. It needs to be done away with.
I'm glad some of these things were changed to help our older citizens, taxes are way, way too high anyway.
Thanks for a good post.
car rentals in miami says
I think people don't get a tax deduction for making a contribution to a Roth IRA, those contributions grow without taxes and we don't have to pay any tax upon withdrawal in retirement. Under IRS rules, we have to consider the entire value of all of your IRAs while converting and figuring taxes on the conversion, if you have nondeductible IRA contributions. It is good to hear senior citizens will get benefit of this.
Echo advertising says
Estate tax is called inheritance tax in the uk I think? Same thing, it seems like a double tax, when I shuffle off this mortal coil my children will be forced to pay tax on money I've already paid tax on! I fail to see how this us in any way fair!
i was just telling a friend of mine about the way the estate taxes used to read so i am glad to see this cleared up. we both live in thailand and i have everything invested here and he has it all in the usa so we both should be ok.
This is great...now senior citizen can feel better...
Unfortunately taxes are not cast in stone and when politically expedient will change.
I agree with "echo advertising" that estate tax is a rip off. Then when it is reduced you are manipulated into thinking that you should be grateful that you are being ripped off for less!
flights to Africa says
Senior Citizens Helped Three Ways by Tax Cut Bill
Art NMD says
This is good news to senior citizen and its sponsors too. Law maker should not limit it this sector only