Tax Law’s Impact


OCEAN CITY – The $858 billion tax law enacted in December – formally known as the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 (the "Act") – promises to affect Americans of all income levels. But while it largely keeps rates steady for the next two years, it also includes some major changes that have taken many taxpayers by surprise.

The answers to these six questions will help you make the most of the opportunities arising from the new Act as you prepare for 2011 and beyond. This week we examine the first two questions.

How will my take-home income be affected?

The Bush-era federal income tax rates have been extended through 2012. The top rate, which would have risen to 39.6%, will stand at 35%, and long-term capital gains and qualified dividends will continue to be taxed at 15%. In addition, the Act gives the vast majority of workers a two percentage point reduction in Social Security payroll tax for 2011, which means that, as an employee, you’ll pay only 4.2% on the first $106,800 of your paycheck, instead of 6.2%.

"That rebate is a big deal," says Andrew Friedman, a tax policy expert and principal of the Washington Update, a website that offers up-to-the-minute insights on government policies that affect finances, taxes and investment. "People making more than $100,000 are going to save around $2,000 on Social Security payroll taxes alone."

How has the estate tax been altered?

Although the estate tax was suspended for 2010, it was scheduled to revert back to the pre-Bush era rate of 55% with a $1 million limit on the amount individuals could pass onto their heirs tax-free. The Act raises that exemption to $5 million, and instates a 35% estate tax rate. Perhaps even more surprising, the Act does something similar for the gift tax, raising the lifetime gift tax exemption from $1 million to $5 million as well. That means a couple can now give their children up to $10 million tax-free.

"Admittedly, that’s going to affect a small number of people, but you don’t have to have $10 million to take advantage of these changes," says Scott Cooper, Managing Director of Merrill Lynch’s Wealth Structuring Group. "Even if you planned on gifting less, you could still save thousands of dollars in taxes by gifting the money this year or next over what you would have paid before."

Cooper advises working with your financial advisor to run the numbers and figure out how much you can gift or put in trust over the next two years without jeopardizing your lifestyle or retirement.

(A Merrill Lynch Wealth Management Advisor. She can be reached at 410-213-8520.)

OC Rec Basketball Action Continues

OCEAN CITY- The Ocean City Recreation and Parks Department’s boys’ winter basketball league continued this week with a full slate of games at Northside Park. The following is a quick look at some of this week’s action: (bullet) Ocean City Lions Club 30- OC FOP 24: Josh Kleinstuber scored 16 points, while Tim Roberts scored eight and Sam Cannon added … Continue reading

Coastal Lax Club Seeking Players

BERLIN- The Coastal Lacrosse Club is seeking players for its 2011 outdoor spring season, but with limited space for players, the team rosters are filling up quickly. The Coastal Lacrosse Club, founded in 2009, is one of Worcester County’s only non-profit lacrosse organization serving young players throughout the area and across Delmarva. The club offers organized, instructional teams for both … Continue reading

Decatur Roll Past Queen Anne’s

BERLIN- Stephen Decatur’s varsity wrestling team remained unbeaten last weekend, cruising past visiting Queen Anne’s, 60-9, to improve to 7-0 heading into a big non-conference dual meet this weekend. The Seahawks lost just two of 14 matches against Queen Anne’s at home last Friday and collected six pins along the way. Matt Meekins started the parade for Decatur with a … Continue reading

Decatur Girls Drop A Pair

BERLIN- Stephen Decatur’s girls’ varsity basketball team dropped a pair of tough games this week, falling to Wicomico, 63-53, last Thursday before losing to Snow Hill, 70-43, on the road on Tuesday. The Seahawks continued to show signs of improving on both ends of the floor but have had little success in terms of the bottom line. Decatur’s record now … Continue reading

Beach Lax Seeking Players, Volunteers

BERLIN- The Beach Lacrosse Club, a volunteer organization that has been around for 18 years and has introduced thousands of young players to the game, is now accepting applications for its spring program. Beach Lacrosse is seeking boys and girls for several teams at various age and skill levels including under-9, under-11, under-13, and under-15. There is also a “scoopers” … Continue reading

Seahawks Outlast Eagles

BERLIN- Stephen Decatur’s boys’ varsity basketball team withstood a big run in the middle of the game by visiting Snow Hill on Tuesday to get by the Eagles, 55-51, to pull to .500 for the season. In basketball, like most sports, what happened in the middle of a game is not as important as what happened in the end, and … Continue reading

SDHS Swistak

Decatur’s Matt Swistak puts up a jumper in the paint during the Seahawks’ 55-51 win over county rival Snow Hill on Tuesday. Swistak finished with a game-high 16 points and grabbed eight rebounds. Photo by Shawn Soper

Berlin Power Outages Caused By Faulty Shut Off Device

BERLIN – A malfunctioning piece of equipment is responsible for a series of brief power outages that struck Berlin this week. The device is called a “DPU” and Electric Utility Director Tim Lawrence compared it to a mainframe computer in regards to the duties it performed for the electric department, the most important of which being to shut down systems … Continue reading