Several tax provisions expired at the end of 2009, and several more expired at the end of 2010. Congress enacted legislation (referenced below as the "Tax Relief and Jobs Creation Act" or "the Act") late in 2010 extending many of these provisions, meaning that they will be available when preparing your 2010 tax return and when computing estimated taxes and payroll tax withholding in 2011. Here is a summary of the extended provisions of most relevance to clergy and church staff:
- Income tax brackets. The lower income tax rates enacted by Congress in 2001 and 2003 were to expire at the end of 2010. The Act extends these lower rates for all taxpayers through the end of 2012.
- Capital gains and dividends. Under prior law, the capital gains and dividend rates for taxpayers below the 25-percent income tax bracket was equal to zero percent. For those in the 25-percent tax bracket and above the capital gains and dividend rates were 15 percent. These rates were to expire at the end of 2010, and higher rates (10 percent and 20 percent) were to apply. The Act extends the lower capital gains and dividends rates for all taxpayers through the end of 2012.