Unless congress changes the rules, everyone will be paying more taxes next year.
NBC25's Dan Armstrong sat down with a tax professional Friday to see how the increases will impact you.
You may be shocked after finding out how much more you'll have to pay in taxes next year.
First off, every person in every tax bracket will automatically pay more.
Here are the current tax brackets and the 2011 bracket increases:
2010 2011
10% 15%
25% 28%
28% 31%
33% 36%
35% 39.6%
The lowest income earners will go from 10% to 15%.
The rest of the brackets will go up 3% except for the highest bracket which goes up 4.6%.
Gary Riedlinger, Director of Taxes at Yeo & Yeo Consultants in Saginaw, says "We don't even require legislation to have massive tax increases."
That's because the tax decreases brought in by the Bush administration expire after 2010.
You also can't deduct as much for your children.
Riedlinger says, "The child tax credit decreases in 2011. For 2010 it's still $1,000 per child, but it goes down to $500 in 2011 and beyond."
Also, the estate tax is back. It's also known as the death tax. It was repealed in 2010, but for 2011 there's a maximum 55% tax on a person leaving a million dollars behind. That means the tax bill could be passed on to loved one.
Tax professionals say your best defense is to be involved, educated, and prepared.
Riedlinger says, "We believe that people should pay their taxes according to the law, but there's no reason to pay more than you have to and if there are ways to defer or avoid taxes within the law, then we certainly want to make sure our clients take advantage of that."
Teachers will also be feeling the pinch. They won't be able to deduct classroom expenses.
Also, deductions from interest on student loans won't be allowed for hundreds of thousands of families.
