The Tax Relief, Unemployment Reauthorization, and Job Creation Act of 2010, signed into law on December 17, 2010 is a sweeping tax package that includes, among many other items the following: Temporary Employee/Self-Employed Payroll Tax Cut for 2011 For 2011 only employees and self -employed will receive a 2% tax holiday on Social Security tax. Employees will pay 4.2% (6.2%-2.0%) . Self -employed will pay 10.4%(12.4%-2.0%). The payroll tax holiday does not apply to Medicare tax nor to the Employer portion of Social Security tax. Please note, the employer match remains at 6.2%. If you do your own payroll, you will need to withhold 4.2% for Social Security taxes and 1.45% for Medicare Taxes, but, you will need to pay the employer portion at 6.2% and 1.45% respectively. Therefore, your total tax deposit for the Social Security and Medicare portion will be 13.30% (4.2% + 1.45% employee portion and 6.2% + 1.45% employer portion). If we prepare your payroll these adjustments will automatically be made. If you use CBS, you will need to update your payroll tax tables prior to entering your first payroll of 2011. If you use CBS online, the tables will be updated for you.    GENERAL The lower tax rates provided in the Economic Growth and Tax Relief Reconciliation Act of 2001 are extended for two more years. The individual rates will stay at 10%,15%,25%,28%,33% and 35% Itemized deductions will not be reduced by 3% for higher income taxpayers. Personal exemptions will not be phased out for higher income taxpayers. The maximum tax on long-term capital gains and qualified dividends will remain at 15% for two years. The AMT has been patched for 2010 and 2011. Many nonrefundable credits will be allowed to offset the AMT for 2010 and 2011.   Business A 100% writeoff in the placed-in-service year of the cost of property eligible for bonus depreciation under Code Sec. 168(k) . This will apply for property acquired and placed in service after Sept. 8, 2010, and before Jan. 1, 2012; A 50% bonus first-year depreciation allowance under Code Sec. 168(k) for property placed in service after Dec. 31, 2011, and before Jan. 1, 2013; Extension through Dec. 31, 2012, of the election to accelerate the AMT credit instead of claiming additional first-year depreciation Tax Breaks for Individuals Retroactively Reinstated and Extended Through 2011 All of the following tax breaks for individuals that expired at the end of 2009 will be retroactively reinstated and extended through 2011: $250 above-the-line deduction for certain expenses of elementary and secondary school teachers; election to take an itemized deduction for State and local general sales taxes in lieu of the itemized deduction permitted for State and local income taxes; increased contribution limits and carryforward period for contributions of appreciated real property (including partial interests in real property) for conservation purposes; above-the-line deduction for qualified tuition and related expenses, provision that permits taxpayers age 70 1/2 or older to make tax-free distributions to charity from an Individual Retirement Account (IRA) of up to $100,000 per taxpayer, per tax year (additionally, individuals will be allowed to treat IRA transfers to charities during January of 2011 and as if made during 2010); look-thru of certain RIC stock in determining gross estate of nonresidents; and disregard of refunds in the administration of federal or federally assisted benefit programs. Other Individual Tax Breaks Extended Through 2011 The following tax breaks for individuals that were set to expire at the end of 2010 will be extended through 2011: increase in the monthly exclusion for employer-provided transit and vanpool benefits equal to that of the exclusion for employer-provided parking benefits (i.e., $230 per moth); treatment of mortgage insurance premiums as deductible qualified residence interest; and exclusion of 100% of gain on certain small business stock.