Saturday, December 18, 2010
JAY LENO: "Congress has voted to extend the Bush tax cuts. Is it me, or is George W. Bush getting more done now that he's out of office than when he was in? ... Congratulations to Tony Romo. He just got engaged to his girlfriend, sports reporter Candice Crawford. So at least SOMEBODY in the Dallas Cowboys is getting a ring this year."
Senate Repeals ‘Don’t Ask, Don’t Tell'
WASHINGTON — The Senate on Saturday voted to strike down the ban on gay men and lesbians serving openly in the military, bringing to a close a 17-year struggle over a policy that forced thousands of Americans from the ranks and caused others to keep secret their sexual orientation.
By a vote of 65 to 31, with eight Republicans joining Democrats, the Senate approved and sent to President Obama a repeal of the Clinton-era law, known as “don’t ask, don’t tell,” a policy critics said amounted to government-sanctioned discrimination that treated gay, lesbian and bisexual troops as second-class citizens.
Mr. Obama hailed the action, which fulfills his pledge to reverse the ban, and said it was “time to close this chapter in our history.”
“As commander in chief, I am also absolutely convinced that making this change will only underscore the professionalism of our troops as the best-led and best-trained fighting force the world has ever known,” he said in a statement after the Senate, on a preliminary 63-to-33 vote, beat back Republican efforts to block final action on the repeal bill.
The vote marked a historic moment that some equated with the end of racial segregation in the military.
It followed an exhaustive Pentagon review that determined the policy could be changed with only isolated disruptions to unit cohesion and retention, though members of combat units and the Marine Corps expressed greater reservations about the shift. Congressional action was backed by Pentagon officials as a better alternative to a court-ordered end.
Supporters of the repeal said it was long past time to abolish what they saw as an ill-advised practice that cost valuable personnel and forced troops to lie to serve their country.
“We righted a wrong,” said Senator Joseph I. Lieberman, the independent from Connecticut and a leader of the effort to end the ban. “Today we’ve done justice.”
Before voting on the repeal, the Senate blocked a bill that would have created a path to citizenship for certain illegal immigrants who came to the United States at a young age, completed two years of college or military service and met other requirements including passing a criminal background check.
The 55-to-41 vote in favor of the citizenship bill was five votes short of the number needed to clear the way for final passage of what is known as the Dream Act.
The outcome effectively kills it for this year, and its fate beyond that is uncertain since Republicans who will assume control of the House in January oppose the measure and are unlikely to bring it to a vote.
The Senate then moved on to the military legislation, engaging in an emotional back and forth over the merits of the measure as advocates for repeal watched from galleries crowded with people interested in the fate of both the military and immigration measures.
“I don’t care who you love,” Senator Ron Wyden, Democrat of Oregon, said as the debate opened. “If you love this country enough to risk your life for it, you shouldn’t have to hide who you are.”
Mr. Wyden showed up for the Senate vote despite saying earlier that he would be unable to do so because he would be undergoing final tests before his scheduled surgery for prostate cancer on Monday.
The vote came in the final days of the 111th Congress as Democrats sought to force through a final few priorities before they turn over control of the House of Representatives to the Republicans in January and see their clout in the Senate diminished.
It represented a significant victory for the White House, Congressional advocates of lifting the ban and activists who have pushed for years to end the Pentagon policy created in 1993 under the Clinton administration as a compromise effort to end the practice of barring gay men and lesbians entirely from military service.
Saying it represented an emotional moment for members of the gay community nationwide, advocates who supported repeal of “don’t ask, don’t tell” exchanged hugs outside the Senate chamber after the vote.
“Today’s vote means gay and lesbian service members posted all around the world can stand taller knowing that ‘don’t ask, don’t tell’ will soon be coming to an end,” said Aubrey Sarvis, an Army veteran and executive director for Servicemembers Legal Defense Network.
Senator John McCain, Republican of Arizona and his party’s presidential candidate in 2008, led the opposition to the repeal and said the vote was a sad day in history.
“I hope that when we pass this legislation that we will understand that we are doing great damage,” Mr. McCain said. “And we could possibly and probably, as the commandant of the Marine Corps said, and as I have been told by literally thousands of members of the military, harm the battle effectiveness vital to the survival of our young men and women in the military.”
He and others opposed to lifting the ban said the change could harm the unit cohesion that is essential to effective military operations, particularly in combat, and deter some Americans from enlisting or pursuing a career in the military. They noted that despite support for repealing the ban from Defense Secretary Robert M. Gates and Adm. Mike Mullen, chairman of the Joint Chiefs of Staff, other military commanders have warned that changing the practice would prove disruptive.
“This isn’t broke,” Senator James M. Inhofe, Republican of Oklahoma, said about the policy. “It is working very well.”
Other Republicans said that while the policy might need to be changed at some point, Congress should not do so when American troops are fighting overseas.
Only a week ago, the effort to repeal the “don’t ask, don’t tell” policy seemed to be dead and in danger of fading for at least two years with Republicans about to take control of the House. The provision eliminating the ban was initially included in a broader Pentagon policy bill, and Republican backers of repeal had refused to join in cutting off a filibuster against the underlying bill because of objections over limits on debate of the measure.
In a last-ditch effort, Mr. Lieberman and Senator Susan Collins of Maine, a key Republican opponent of the ban, encouraged Democratic Congressional leaders to instead pursue a vote on simply repealing it. The House passed the measure earlier in the week.
The repeal will not take effect for at least 60 days, and probably longer, while some other procedural steps are taken. In addition, the bill requires the defense secretary to determine that policies are in place to carry out the repeal “consistent with military standards for readiness, effectiveness, unit cohesion, and recruiting and retention.”
“It is going to take some time,” Ms. Collins said. “It is not going to happen overnight.”
In a statement, Mr. Gates said that once the measure was signed into law, he would “immediately proceed with the planning necessary to carry out this change carefully and methodically, but purposefully.” In the meantime, he said, “the current law and policy will remain in effect.”
Because of the delay in formally overturning the policy, Mr. Sarvis appealed to Mr. Gates to suspend any investigations into military personnel or discharge proceedings now under way. Legal challenges to the existing ban are also expected to continue until the repeal is fully carried out.
In addition to Ms. Collins, Republicans backing the repeal were Senators Scott P. Brown of Massachusetts, Richard M. Burr of North Carolina, John Ensign of Nevada, Mark Kirk of Illinois, Lisa Murkowski of Alaska, Olympia J. Snowe of Maine and George V. Voinovich of Ohio.
“It was a difficult vote for many of them,” Ms. Collins said, “but in the end they concluded, as I have concluded, that we should welcome the service of any qualified individual who is willing to put on the uniform of this country.”
Mr. Lieberman said the ban undermined the integrity of the military by forcing troops to lie. He said 14,000 people had been forced to leave the armed forces under the policy.
“What a waste,” he said.
The fight erupted in the early days of President Bill Clinton’s administration and has been a roiling political issue ever since. Mr. Obama endorsed repeal in his presidential campaign and advocates saw the current Congress as their best opportunity for ending the ban. Dozens of advocates of ending the ban — including one severely wounded in combat before being forced from the military — watched from the Senate gallery as the debate took place.
Senator Carl Levin, the Michigan Democrat who is chairman of the Armed Services Committee, dismissed Republican complaints that Democrats were trying to race through the repeal to satisfy their political supporters.
“I’m not here for partisan reasons,” Mr. Levin said. “I’m here because men and women wearing the uniform of the United States who are gay and lesbian have died for this country, because gay and lesbian men and women wearing the uniform of this country have their lives on the line right now.”
CARL HULSE
WashintonPost
By a vote of 65 to 31, with eight Republicans joining Democrats, the Senate approved and sent to President Obama a repeal of the Clinton-era law, known as “don’t ask, don’t tell,” a policy critics said amounted to government-sanctioned discrimination that treated gay, lesbian and bisexual troops as second-class citizens.
Mr. Obama hailed the action, which fulfills his pledge to reverse the ban, and said it was “time to close this chapter in our history.”
“As commander in chief, I am also absolutely convinced that making this change will only underscore the professionalism of our troops as the best-led and best-trained fighting force the world has ever known,” he said in a statement after the Senate, on a preliminary 63-to-33 vote, beat back Republican efforts to block final action on the repeal bill.
The vote marked a historic moment that some equated with the end of racial segregation in the military.
It followed an exhaustive Pentagon review that determined the policy could be changed with only isolated disruptions to unit cohesion and retention, though members of combat units and the Marine Corps expressed greater reservations about the shift. Congressional action was backed by Pentagon officials as a better alternative to a court-ordered end.
Supporters of the repeal said it was long past time to abolish what they saw as an ill-advised practice that cost valuable personnel and forced troops to lie to serve their country.
“We righted a wrong,” said Senator Joseph I. Lieberman, the independent from Connecticut and a leader of the effort to end the ban. “Today we’ve done justice.”
Before voting on the repeal, the Senate blocked a bill that would have created a path to citizenship for certain illegal immigrants who came to the United States at a young age, completed two years of college or military service and met other requirements including passing a criminal background check.
The 55-to-41 vote in favor of the citizenship bill was five votes short of the number needed to clear the way for final passage of what is known as the Dream Act.
The outcome effectively kills it for this year, and its fate beyond that is uncertain since Republicans who will assume control of the House in January oppose the measure and are unlikely to bring it to a vote.
The Senate then moved on to the military legislation, engaging in an emotional back and forth over the merits of the measure as advocates for repeal watched from galleries crowded with people interested in the fate of both the military and immigration measures.
“I don’t care who you love,” Senator Ron Wyden, Democrat of Oregon, said as the debate opened. “If you love this country enough to risk your life for it, you shouldn’t have to hide who you are.”
Mr. Wyden showed up for the Senate vote despite saying earlier that he would be unable to do so because he would be undergoing final tests before his scheduled surgery for prostate cancer on Monday.
The vote came in the final days of the 111th Congress as Democrats sought to force through a final few priorities before they turn over control of the House of Representatives to the Republicans in January and see their clout in the Senate diminished.
It represented a significant victory for the White House, Congressional advocates of lifting the ban and activists who have pushed for years to end the Pentagon policy created in 1993 under the Clinton administration as a compromise effort to end the practice of barring gay men and lesbians entirely from military service.
Saying it represented an emotional moment for members of the gay community nationwide, advocates who supported repeal of “don’t ask, don’t tell” exchanged hugs outside the Senate chamber after the vote.
“Today’s vote means gay and lesbian service members posted all around the world can stand taller knowing that ‘don’t ask, don’t tell’ will soon be coming to an end,” said Aubrey Sarvis, an Army veteran and executive director for Servicemembers Legal Defense Network.
Senator John McCain, Republican of Arizona and his party’s presidential candidate in 2008, led the opposition to the repeal and said the vote was a sad day in history.
“I hope that when we pass this legislation that we will understand that we are doing great damage,” Mr. McCain said. “And we could possibly and probably, as the commandant of the Marine Corps said, and as I have been told by literally thousands of members of the military, harm the battle effectiveness vital to the survival of our young men and women in the military.”
He and others opposed to lifting the ban said the change could harm the unit cohesion that is essential to effective military operations, particularly in combat, and deter some Americans from enlisting or pursuing a career in the military. They noted that despite support for repealing the ban from Defense Secretary Robert M. Gates and Adm. Mike Mullen, chairman of the Joint Chiefs of Staff, other military commanders have warned that changing the practice would prove disruptive.
“This isn’t broke,” Senator James M. Inhofe, Republican of Oklahoma, said about the policy. “It is working very well.”
Other Republicans said that while the policy might need to be changed at some point, Congress should not do so when American troops are fighting overseas.
Only a week ago, the effort to repeal the “don’t ask, don’t tell” policy seemed to be dead and in danger of fading for at least two years with Republicans about to take control of the House. The provision eliminating the ban was initially included in a broader Pentagon policy bill, and Republican backers of repeal had refused to join in cutting off a filibuster against the underlying bill because of objections over limits on debate of the measure.
In a last-ditch effort, Mr. Lieberman and Senator Susan Collins of Maine, a key Republican opponent of the ban, encouraged Democratic Congressional leaders to instead pursue a vote on simply repealing it. The House passed the measure earlier in the week.
The repeal will not take effect for at least 60 days, and probably longer, while some other procedural steps are taken. In addition, the bill requires the defense secretary to determine that policies are in place to carry out the repeal “consistent with military standards for readiness, effectiveness, unit cohesion, and recruiting and retention.”
“It is going to take some time,” Ms. Collins said. “It is not going to happen overnight.”
In a statement, Mr. Gates said that once the measure was signed into law, he would “immediately proceed with the planning necessary to carry out this change carefully and methodically, but purposefully.” In the meantime, he said, “the current law and policy will remain in effect.”
Because of the delay in formally overturning the policy, Mr. Sarvis appealed to Mr. Gates to suspend any investigations into military personnel or discharge proceedings now under way. Legal challenges to the existing ban are also expected to continue until the repeal is fully carried out.
In addition to Ms. Collins, Republicans backing the repeal were Senators Scott P. Brown of Massachusetts, Richard M. Burr of North Carolina, John Ensign of Nevada, Mark Kirk of Illinois, Lisa Murkowski of Alaska, Olympia J. Snowe of Maine and George V. Voinovich of Ohio.
“It was a difficult vote for many of them,” Ms. Collins said, “but in the end they concluded, as I have concluded, that we should welcome the service of any qualified individual who is willing to put on the uniform of this country.”
Mr. Lieberman said the ban undermined the integrity of the military by forcing troops to lie. He said 14,000 people had been forced to leave the armed forces under the policy.
“What a waste,” he said.
The fight erupted in the early days of President Bill Clinton’s administration and has been a roiling political issue ever since. Mr. Obama endorsed repeal in his presidential campaign and advocates saw the current Congress as their best opportunity for ending the ban. Dozens of advocates of ending the ban — including one severely wounded in combat before being forced from the military — watched from the Senate gallery as the debate took place.
Senator Carl Levin, the Michigan Democrat who is chairman of the Armed Services Committee, dismissed Republican complaints that Democrats were trying to race through the repeal to satisfy their political supporters.
“I’m not here for partisan reasons,” Mr. Levin said. “I’m here because men and women wearing the uniform of the United States who are gay and lesbian have died for this country, because gay and lesbian men and women wearing the uniform of this country have their lives on the line right now.”
CARL HULSE
WashintonPost
Trash does trash or something like that! (Crystal Mangum of contributing to child abuse or neglect)
Duke lacrosse accuser convicted of child abuse
DURHAM, N.C. -- A woman who authorities said falsely accused three Duke University lacrosse players of rape four years ago has been found guilty by a North Carolina jury of misdemeanor child abuse and damaging property.
A Durham County jury on Friday convicted 32-year-old Crystal Mangum of contributing to child abuse or neglect, injury to personal property, and resisting a public officer stemming from a February confrontation with her live-in boyfriend. Mangum was sentenced to time already served before she was released on bail earlier this year.
The jury deadlocked 9-3 on a felony arson charge, and Superior Court Judge Abraham Jones declared a mistrial.
Police said Mangum piled her boyfriend's clothing into a bathtub and set it on fire while her three children and two police officers were inside the apartment.
THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.
DURHAM, N.C. (AP) - A woman who authorities said falsely accused three Duke University lacrosse players of rape four years ago has been found guilty by a North Carolina jury of child abuse and damaging property.
A Durham County jury on Friday convicted 32-year-old Crystal Mangum of contributing to child abuse or neglect. She was also convicted of injury to personal property, and resisting a public officer stemming from a February confrontation with her live-in boyfriend. All the charges were misdemeanors.
The jury deadlocked 9-3 on a felony arson charge, and Superior Court Judge Abraham Jones declared a mistrial.
Police said Mangum piled her boyfriend's clothing into a bathtub and set it on fire while her three children and two police officers were inside the apartment.
DURHAM, N.C. -- A woman who authorities said falsely accused three Duke University lacrosse players of rape four years ago has been found guilty by a North Carolina jury of misdemeanor child abuse and damaging property.
A Durham County jury on Friday convicted 32-year-old Crystal Mangum of contributing to child abuse or neglect, injury to personal property, and resisting a public officer stemming from a February confrontation with her live-in boyfriend. Mangum was sentenced to time already served before she was released on bail earlier this year.
The jury deadlocked 9-3 on a felony arson charge, and Superior Court Judge Abraham Jones declared a mistrial.
Police said Mangum piled her boyfriend's clothing into a bathtub and set it on fire while her three children and two police officers were inside the apartment.
THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.
DURHAM, N.C. (AP) - A woman who authorities said falsely accused three Duke University lacrosse players of rape four years ago has been found guilty by a North Carolina jury of child abuse and damaging property.
A Durham County jury on Friday convicted 32-year-old Crystal Mangum of contributing to child abuse or neglect. She was also convicted of injury to personal property, and resisting a public officer stemming from a February confrontation with her live-in boyfriend. All the charges were misdemeanors.
The jury deadlocked 9-3 on a felony arson charge, and Superior Court Judge Abraham Jones declared a mistrial.
Police said Mangum piled her boyfriend's clothing into a bathtub and set it on fire while her three children and two police officers were inside the apartment.
IF SARAH only knew what she was talking about! Come girl you're cute but.....?!
Sarah Palin Facebook posting,
"De-link Missile Defense; Defeat New START": "The following statement I wrote regarding the New START treaty was just posted at National Review Online's The Corner: ...
The proposed New START agreement should be evaluated by the only criteria that matters for a treaty: Is it in America's interest? I am convinced this treaty is not. It should not be rammed through in the lame duck session using behind the scenes deal-making reminiscent of the tactics used in the health care debate.
... If I had a vote, I would oppose this deeply flawed treaty submitted to the Senate. Just because we were out-negotiated by the Russians that doesn't mean we have to say yes to this."
"De-link Missile Defense; Defeat New START": "The following statement I wrote regarding the New START treaty was just posted at National Review Online's The Corner: ...
The proposed New START agreement should be evaluated by the only criteria that matters for a treaty: Is it in America's interest? I am convinced this treaty is not. It should not be rammed through in the lame duck session using behind the scenes deal-making reminiscent of the tactics used in the health care debate.
... If I had a vote, I would oppose this deeply flawed treaty submitted to the Senate. Just because we were out-negotiated by the Russians that doesn't mean we have to say yes to this."
What does the tax deal mean to you?
Millions of taxpayers — including those who earn $250,000 or more — won't have to worry about a tax increase next year thanks to the compromise tax agreement that cleared the House late Thursday night.
Average Americans
A cut in Social Security payroll taxes
The compromise decreases Social Security payroll taxes to 4.2% from 6.2% for one year. The White House estimates the payroll tax cut will reduce taxes by $120 billion next year for 155 million workers.
The payroll tax cut will save a worker with annual income of $40,000 about $800 a year. A worker with $70,000 in income will save $1,400.
Unlike the income tax cuts, which benefit only workers who earn enough to owe federal income taxes, the payroll tax cut affects just about every working American.
Other individual tax breaks extended through 2011:
•A provision that allows taxpayers who itemize to deduct state and local sales taxes. This provision gives taxpayers the option of deducting state and local sales taxes instead of state income taxes. This provision mainly benefits taxpayers in the seven states that impose no income tax, but charge state sales taxes.
•A deduction of up to $250 for educators who spend their own money on classroom supplies. This is an above-the-line deduction, so teachers don't have to itemize to claim it.
•A tax credit for taxpayers who make energy-efficient improvements to their homes. However, the legislation pares back a more generous 30% credit included in the economic stimulus bill. Homeowners will be eligible for a 10% credit, up to specific maximum amounts, if they install insulation or energy-efficient windows or roofs. Taxpayers will also be eligible for credits ranging from $50 to $150 for purchases of energy-efficient fans, water heaters and furnaces.
The unemployed
13-month extension of jobless benefits
The agreement extends jobless benefits for the long-term unemployed by 13 months, through the end of 2011. Without the extension, 7 million unemployed workers would have lost their benefits by next November.
Seniors
Charitable contributions from IRAs
The bill extends through 2011 a provision that allows seniors who are 70½ or older to donate up to $100,000 from their individual retirement accounts to charity. The contribution isn't tax-deductible, but the withdrawal won't be included in the IRA owner's taxable income for the year. That feature has made the provision particularly popular with seniors who have paid off their mortgages and don't have enough deductions to itemize.
PARENTS: Child tax credits
INVESTORS: Capital gains tax rate
WEALTHY FAMILIES: Estate tax exemptions
The withdrawal also counts towards the IRA owner's minimum distribution for the year. IRA owners who are 70½ or older are required to withdraw a minimum amount every year and pay taxes on the withdrawal, whether they need the money or not.
Because the legislation was enacted so late in the year, many seniors may have already taken their minimum distributions for 2010. The legislation doesn't appear to provide relief for IRA owners who would like to reverse the distribution and give the money to charity, says Mark Joseph, a financial planner in Reston, Va.
However, the legislation does give seniors who postponed taking a distribution a little more time. Seniors have until Jan. 31, 2011, to make a contribution from their IRA to charity and have it count toward their 2010 required minimum distribution.
Homeowners
Mortgage insurance deductions 'til 2011
A deduction for mortgage insurance premiums will be extended through 2011. Most homebuyers who put less than 20% down on a home loan have to pay mortgage insurance, which is designed to protect lenders from default.
However, a tax break targeted at homeowners who don't itemize wasn't extended. This tax break allowed homeowners to increase their standard deduction by the amount of their state and property taxes, up to $500 for single homeowners or $1,000 for married couples. This tax break expired at the end of 2009; because it wasn't renewed, homeowners won't be able to claim this deduction on their 2010 tax return, according to tax publisher CCH.
Parents
Child tax credits, education breaks
The child tax credit will be extended for two years. This credit allows eligible families to reduce their federal tax bill by up to $1,000 for each qualifying child under age 17. In addition, the expansion of the Earned Income Tax Credit included in the economic stimulus package will continue for two more years.
The agreement also extends several tax breaks designed to reduce the cost of paying for college, including:
•The American Opportunity Credit, which is designed to offset the cost of college. The credit, extended through 2012, provides a tax credit of up to $2,500 per college student per year. Taxpayers can claim the credit for up to 100% of the first $2,000 in qualified college costs and 25% of the next $2,000. To get the full credit, you'll need to spend at least $4,000 on qualified expenses.
Forty percent of the credit is refundable, so a low-income family that doesn't owe federal taxes could receive a check from the government for up to $1,000.
In addition, the income limits on this credit are broader than limits on the Hope and Lifetime Learning Credits, which have been around since the Clinton administration. Married couples with modified adjusted gross income of up to $160,000 can claim the full credit.
•Coverdell Savings Accounts. The tax agreement allows families to contribute up to $2,000 a year to these tax-advantaged accounts through 2012. Without the extension, the maximum annual contribution to these accounts would have dropped to $500 in 2011. Unlike the more widely used 529 college savings accounts, money from Coverdell accounts can also be used for elementary and secondary private school expenses.
•Student loan deduction. A provision that allows student-loan borrowers to deduct up to $2,500 in interest on federal student loans will be extended through 2012. Without the extension, the deduction would have still been available, but with lower limits for eligible borrowers.
Investors
No increase in capital gains tax rate
The top tax rate for capital gains and dividends will remain at 15% through 2012, or 0% for taxpayers in the 10% and 15% tax brackets, through 2012. If the tax cuts had been allowed to expire, the top rate for capital gains would have risen to 20% next year. The top rate for dividends would have risen to the investor's ordinary income tax rate — up to 39.6% for the wealthiest taxpayers.
Wealthy families
Estate tax exemptions; brakes on AMT
The compromise exempts estates valued at less than $5 million per person from estate taxes. For estates that exceed that threshold, assets over $5 million per person will be taxed at a 35% rate.
The federal estate tax expired at the end of 2009, allowing heirs of wealthy scions who died this year to inherit millions of dollars tax-free. It was scheduled to return next year at a higher rate: 55% on estates valued at more than $1 million.
The agreement includes a stopgap measure to prevent the alternative minimum tax from spreading rapidly. Without the agreement, up to 25 million taxpayers would be subjected to the AMT in 2010, up from 3.9 million in 2009, according to an analysis by H&R Block. Those taxpayers would owe an average of $3,000 to $5,000 in additional taxes, the analysis said.
The agreement extends until 2012 repeal of a provision that limited the amount of personal exemptions high-income taxpayers could claim.
USA TODAY
Average Americans
A cut in Social Security payroll taxes
The compromise decreases Social Security payroll taxes to 4.2% from 6.2% for one year. The White House estimates the payroll tax cut will reduce taxes by $120 billion next year for 155 million workers.
The payroll tax cut will save a worker with annual income of $40,000 about $800 a year. A worker with $70,000 in income will save $1,400.
Unlike the income tax cuts, which benefit only workers who earn enough to owe federal income taxes, the payroll tax cut affects just about every working American.
Other individual tax breaks extended through 2011:
•A provision that allows taxpayers who itemize to deduct state and local sales taxes. This provision gives taxpayers the option of deducting state and local sales taxes instead of state income taxes. This provision mainly benefits taxpayers in the seven states that impose no income tax, but charge state sales taxes.
•A deduction of up to $250 for educators who spend their own money on classroom supplies. This is an above-the-line deduction, so teachers don't have to itemize to claim it.
•A tax credit for taxpayers who make energy-efficient improvements to their homes. However, the legislation pares back a more generous 30% credit included in the economic stimulus bill. Homeowners will be eligible for a 10% credit, up to specific maximum amounts, if they install insulation or energy-efficient windows or roofs. Taxpayers will also be eligible for credits ranging from $50 to $150 for purchases of energy-efficient fans, water heaters and furnaces.
The unemployed
13-month extension of jobless benefits
The agreement extends jobless benefits for the long-term unemployed by 13 months, through the end of 2011. Without the extension, 7 million unemployed workers would have lost their benefits by next November.
Seniors
Charitable contributions from IRAs
The bill extends through 2011 a provision that allows seniors who are 70½ or older to donate up to $100,000 from their individual retirement accounts to charity. The contribution isn't tax-deductible, but the withdrawal won't be included in the IRA owner's taxable income for the year. That feature has made the provision particularly popular with seniors who have paid off their mortgages and don't have enough deductions to itemize.
PARENTS: Child tax credits
INVESTORS: Capital gains tax rate
WEALTHY FAMILIES: Estate tax exemptions
The withdrawal also counts towards the IRA owner's minimum distribution for the year. IRA owners who are 70½ or older are required to withdraw a minimum amount every year and pay taxes on the withdrawal, whether they need the money or not.
Because the legislation was enacted so late in the year, many seniors may have already taken their minimum distributions for 2010. The legislation doesn't appear to provide relief for IRA owners who would like to reverse the distribution and give the money to charity, says Mark Joseph, a financial planner in Reston, Va.
However, the legislation does give seniors who postponed taking a distribution a little more time. Seniors have until Jan. 31, 2011, to make a contribution from their IRA to charity and have it count toward their 2010 required minimum distribution.
Homeowners
Mortgage insurance deductions 'til 2011
A deduction for mortgage insurance premiums will be extended through 2011. Most homebuyers who put less than 20% down on a home loan have to pay mortgage insurance, which is designed to protect lenders from default.
However, a tax break targeted at homeowners who don't itemize wasn't extended. This tax break allowed homeowners to increase their standard deduction by the amount of their state and property taxes, up to $500 for single homeowners or $1,000 for married couples. This tax break expired at the end of 2009; because it wasn't renewed, homeowners won't be able to claim this deduction on their 2010 tax return, according to tax publisher CCH.
Parents
Child tax credits, education breaks
The child tax credit will be extended for two years. This credit allows eligible families to reduce their federal tax bill by up to $1,000 for each qualifying child under age 17. In addition, the expansion of the Earned Income Tax Credit included in the economic stimulus package will continue for two more years.
The agreement also extends several tax breaks designed to reduce the cost of paying for college, including:
•The American Opportunity Credit, which is designed to offset the cost of college. The credit, extended through 2012, provides a tax credit of up to $2,500 per college student per year. Taxpayers can claim the credit for up to 100% of the first $2,000 in qualified college costs and 25% of the next $2,000. To get the full credit, you'll need to spend at least $4,000 on qualified expenses.
Forty percent of the credit is refundable, so a low-income family that doesn't owe federal taxes could receive a check from the government for up to $1,000.
In addition, the income limits on this credit are broader than limits on the Hope and Lifetime Learning Credits, which have been around since the Clinton administration. Married couples with modified adjusted gross income of up to $160,000 can claim the full credit.
•Coverdell Savings Accounts. The tax agreement allows families to contribute up to $2,000 a year to these tax-advantaged accounts through 2012. Without the extension, the maximum annual contribution to these accounts would have dropped to $500 in 2011. Unlike the more widely used 529 college savings accounts, money from Coverdell accounts can also be used for elementary and secondary private school expenses.
•Student loan deduction. A provision that allows student-loan borrowers to deduct up to $2,500 in interest on federal student loans will be extended through 2012. Without the extension, the deduction would have still been available, but with lower limits for eligible borrowers.
Investors
No increase in capital gains tax rate
The top tax rate for capital gains and dividends will remain at 15% through 2012, or 0% for taxpayers in the 10% and 15% tax brackets, through 2012. If the tax cuts had been allowed to expire, the top rate for capital gains would have risen to 20% next year. The top rate for dividends would have risen to the investor's ordinary income tax rate — up to 39.6% for the wealthiest taxpayers.
Wealthy families
Estate tax exemptions; brakes on AMT
The compromise exempts estates valued at less than $5 million per person from estate taxes. For estates that exceed that threshold, assets over $5 million per person will be taxed at a 35% rate.
The federal estate tax expired at the end of 2009, allowing heirs of wealthy scions who died this year to inherit millions of dollars tax-free. It was scheduled to return next year at a higher rate: 55% on estates valued at more than $1 million.
The agreement includes a stopgap measure to prevent the alternative minimum tax from spreading rapidly. Without the agreement, up to 25 million taxpayers would be subjected to the AMT in 2010, up from 3.9 million in 2009, according to an analysis by H&R Block. Those taxpayers would owe an average of $3,000 to $5,000 in additional taxes, the analysis said.
The agreement extends until 2012 repeal of a provision that limited the amount of personal exemptions high-income taxpayers could claim.
USA TODAY
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