Uncertainty plagues end-of-year tax planning
The Senate voted this afternoon to move ahead with Obama's compromise tax cut package. A final Senate vote is expected Tuesday. But the bill still faces an uncertain future in the House.
Rob Koenig, Washington Correspondent for the St Louis Beacon joined this morning on St. Louis on the Air, as he does most Mondays, with an up-to-the minute synopsis of the tax cut debate. Rob predicts one of three possible outcomes:
- Both the Senate and the House approve the compromise, as is, and it is signed into law.
- Or, the Senate passes it as is, the House tweaks it, and the Senate accepts the House changes, and the bill is signed into law.
- Or, the Senate passes it as is, the House makes substantial changes, and the Senate refuses to accept those changes, resulting in a standoff.
We were also joined today by Lance Weiss, CPA and Tax Partner with Shapiro, Flom & Company. He says that traditional end-of-year tax advice just doesn't apply this year.
"It's been very difficult to do year end planning because we just don't know what the rules will be next year. We're facing more uncertainty than we have in the past, but a good place to start is still by pulling out your 2009 tax return. See how your income and deductions compare to last year because we do know roughly what the rates will be."
Of particular interest to many of you will be the the outcome of the debate surrounding the Alternative Minimum Tax (AMT) (which Weiss says should really be called the Alternative Maximum Tax.) The Senate version, expected to pass tomorrow, would increase the exemption to $72,000 for married couples filing jointly. If the Senate version fails in the House, the exemption will start at $45,000 for married couples filing jointly, resulting in nearly 25 million tax payers paying the AMT. We'll keep an eye on developments on Capitol Hill...
Meanwhile, some other helpful tax tidbits from today's show, for those of you plowing ahead on your 2010 returns:
- Charitable contributions that you hope to deduct from your 2010 taxes, need to be made in the next two weeks.
- Are a student paying for your education? A former student paying off your loans? A parent paying for your child? There are at least 17 potential tax breaks to be aware of. Check out the IRS Website.
- Have you made energy efficiency improvements to you home or business this year? You may be eligible for a tax break.
Listen to the full audio from today's show for everything you need to know about which type of IRA account to invest in and what pieces of paper not to throw away.
We also invite you to continue the conversation by commenting below, or sending us an email at firstname.lastname@example.org.