Q. What are the chances that the manufacturing deduction will be extended through 2011? R.D., Springfield, Mo.
A. Good news: The Section 199 "manufacturing" deduction is still available for 2011 and beyond. The deduction wasn't part of the 2001 law that included provisions scheduled to "sunset" after 2010. Instead, the deduction was created by the American Jobs Creation Act of 2004. It's been gradually raised from a maximum deduction of 3% of qualified production activities (QPA) to its current high-point of 9% of QPA.
Tip: Remember that the deduction is limited to 50% of wages reported on Form W-2s.