Tax planning will be tricky this year because it's unclear what Congress will do with a number of tax laws. If next year arrives without any major changes, working Americans at all income levels will pay a bigger tax bill.

The Bush tax cuts enacted in 2001 and 2003 are set to expire in 2010 and put an end to some of the laws that lowered taxes for both individuals and businesses. Some of the bigger changes for businesses will require companies to show more transparency when filing taxes and file more paperwork to the IRS.

The good news is that a bill signed into law in September will give tax breaks to small businesses. Regardless, it's a good year to get some expert tax advice and consider tax planning strategies.

Here is a summary of some of the bigger changes scheduled to take place in 2011 unless Congress makes modifications by the end of the year.

• For Individuals

• For Business

For Individuals

Your Paycheck
The most significant change in 2011 will be the increase in individual income tax rates. The top rate, which now is applied to $373,651 or more in earnings, would increase to 39.6% from 35%. Tax filers in the 10% tax bracket would move into the 15% bracket. That bracket would apply to everyone with incomes below $34,550. Other bracket moves: The 25% bracket rises to 28%; the 28% bracket to 31%; the 33% bracket to 36%. If you are expecting a bonus, tax advisers say it might be worthwhile to ask for it before 2010 closes out. If you are a consultant or independent business owner, you may want to bill and collect early for projects in order to take advantage of 2010's lower tax rates. That may require sending invoices in plenty of time to ensure payment by year end.

Tax Credits for Children/Education

In 2011, the tax credit parents can claim per child under age 17 will decrease by 50% to $500 from $1,000. And, if you are thinking of going back to school, you will want to know about the change in the education credit. Until now, Congress has supported tax breaks for education. Those breaks allow taxpayers to reduce their bills by claiming a credit of up to $2,500 for expenses. "This was far more favorable than other tax incentives because it was dollar-for-dollar savings," says Melissa Labant, a tax manager with the American Institute of Certified Public Accountants. "Unless something happens, that will go away."

Boat Purchases
The good news is that 2011 will finally be the year to buy that yacht you've been lusting after. Sales tax on a boat purchase in Florida now can't exceed $18,000. Before the law changed, many taxpayers either purchased the boats outside of Florida or used other tax planning techniques to reduce or eliminate the sales tax, says Joe Moffa, a tax attorney with Moffa & Gainor in Fort Lauderdale.

Estates

If you die in 2010, your heirs will not pay taxes on the money they inherit. That's about to change. Starting Jan. 1, 2011, the estate tax rate will return to its pre-Bush levels of up to 55% after a $1-million exemption. This means the difference between dying by Dec. 31, 2010, and dying on or after Jan. 1, 2011, can mean 55% of your estate over $1 million. "That's a huge change," says Randy Macpherson, managing director of financial advisory firm WTAS in West Palm Beach. "People who fear leaving their beneficiaries with a huge tax obligation, or who want to assure that no one gets left out, may need to rewrite their will or living trust."

Roth IRA Conversion
Until now, only taxpayers with adjusted gross income less than $100,000 were eligible to convert their traditional IRAs to Roth IRAs for tax years prior to 2010. Now for the first time, anyone, regardless of income, has the opportunity to benefit from the tax-free growth a Roth IRA offers. And for the 2010 tax year only, you have the chance to defer any tax you might owe on the conversion and pay it in equal installments with your 2011 and 2012 tax filings. Some caution: When you pull the money out of the IRA to convert, you should plan to use non-IRA money to pay the taxes. "There are tax-planning opportunities for those affected by the recession," Farra notes.

"If your income has gone down and you're in a lower tax bracket, it may be wise to convert your IRA into Roth IRA in 2010 and take advantage of your lower income tax rates." Anyone who has a retirement account at work should know that the Small Business Act allows employees to convert all or a portion of their traditional retirement plan, typically a 401(k), to a Roth IRA. The amount of the conversion would be taxable income.

Marriage Penalty
Beginning in 2011, a married couple filing a joint return and taking a standard deduction will pay more tax than if they each filed individual 1040s. The standard deduction for couples would stand at 167% of the standard deduction for singles, rather than at 200%. "This may cause some couples in Florida to start itemizing," Labant says.

Dividends

If you're in a high tax bracket, your taxes on qualified dividends will rise to as much as 39.6% from the current 15%. Dividends will go back to being taxed as ordinary income. "You might want to consider whether municipal bonds are more attractive," Macpherson says.

Capital Gains

If you have investment property or stocks you have owned for more than a year that have appreciated, you may want to sell and recognize gains now rather than risk paying higher taxes next year. The top capital gains tax rises to 20% in 2011 from 15% this year. Conversely, you may want to hold onto possible capital losses. "Those losses will be more valuable in future years when the capital gains and ordinary income tax rates are higher," says Miguel Farra, tax partner at Morrison, Brown, Argiz & Farra in Miami.

For Business

Equipment
Some businesses will be eligible for up to a $50,000 refund of sales taxes paid on equipment used in manufacturing or space port activities. This is an incentive program created through the Florida Office of Tourism, Trade and Economic Development. Joe Moffa, a Fort Lauderdale tax attorney, believes this will entice some companies to upgrade their equipment. He recommends applying early for the refund, which will be awarded on a first-come basis. To spur investment, the new Small Business Jobs Bill extends the deduction for bonus depreciation, allowing businesses to immediately write off 50% of the cost of new equipment investments they make in 2010.

Payroll Forgiveness and Hiring Credit

Companies considering hiring workers have some added incentive. They will get a tax break as part of the Hiring Incentives to Restore Employment Act (HIRE). The tax change effectively exempts employers from their share of Social Security tax for 2010 wages of employees hired after Feb. 3, 2010, and before Jan. 1, 2011. It applies generally to individuals hired who have been unemployed for the previous 60 days and could potentially be taken on employees who were laid off and then rehired. Employers also get a maximum $1,000 tax credit for making new hires after Feb. 3, 2010, and before Jan. 1, 2011. To get the credit, those employees must be retained for at least 52 weeks.

Small-Business Expensing
The new Small Business Jobs and Credit Act grants a tax-saving windfall to taxpayers with eligible property. For 2010 and 2011, the limit will be $500,000, with a dollar-for-dollar phase-out starting when purchases for the year exceed $2 million. It also temporarily expands the definition of eligible property to include qualified leasehold-improvement, restaurant and retail-improvement property. The maximum amount of such property that can be expensed is $250,000.

Small Employer Health Insurance Credit
Under Obamacare, small employers may qualify for a tax credit for a portion of their contribution toward an employee's health insurance premiums. Here's the catch: You must be an employer with a staff of no more than 25 full-time workers who earn average annual wages of no more than $50,000. The credit may be claimed for tax years beginning in 2010. "The credit typically pays for the cost of setting up the plan," Farra says.

S-Corporation Gains Tax

The Small Business Jobs Act temporarily reduces the asset holding period S corporations that have converted from C corporations must meet to avoid built-in gains tax. For assets sold in the tax year beginning in 2011 (not 2010), the holding period will be five years. (It had been reduced to seven years for assets sold in tax years beginning in 2009 and 2010.) This will allow an S corporation to dispose of an asset with built-in gains earlier without paying a penalty tax on built-in gains. S corporations that have been holding on to assets because they didn't meet the seven-year holding period should see if they'll qualify for the five-year holding period next year and, if so, consider whether it would be beneficial to sell assets then.

Information Reporting
As part of President Obama's healthcare law, companies will have to issue 1099 tax forms, not just to contract workers but to any individual or company from which they buy more than $600 in goods or services in a tax year. If an employer buys a computer and printer that costs more than $600 from Costco, for example, it will have to issue a 1099 for that. All businesses, no matter how small, fall under the law. "It may seem like a small change," says Vicki Meyer, a CPA with Thomas Howell Ferguson in Tallahassee. "But it will require millions of additional forms to be sent out." Another new reporting requirement is that beginning in 2011, businesses will need to include the value of the healthcare benefits they provide to employees on W-2s. As in the past, the amount reported will not be considered taxable income.

Cancellation of Debt
Tax advisers say deferral of cancellation of business debt is designed to help businesses affected by today's economy. Many businesses recently have been forced to renegotiate debt, which often results in cancellation of debt income that is subject to tax at ordinary income rates. Certain businesses can choose to delay recognition income from the cancellation of business debt and recognize it during the five years from 2014 to 2018.