Home > Strictly TAXES! > Tax Increases ARE Coming~Unless Congress Takes Action! (Part 2)

Tax Increases ARE Coming~Unless Congress Takes Action! (Part 2)

Tax Cuts Are Scheduled To Sunset! 

(Part 2)

In my last writing to you, I highlighted two of the tax cuts that are scheduled to expire for 2010 that will affect many taxpayers for this upcoming tax season. Just to re-cap, here they are again:
  • Non-Itemizers Real Property Tax Deduction – The $500 ($1,000 for joint filers) property tax deduction for non-itemizers expired after 2009. This most likely will impact lower-income taxpayers, or those whose homes are mortgage-free and have no home interest expense, and who are unable to itemize their deductions. For taxpayers in the 15% tax bracket, this equates to a $75 tax increase (or $150 for joint filers).
  • Sales Tax in Lieu of State Income Tax – The option to deduct sales tax in lieu of state income tax as an itemized deduction on a taxpayer’s Schedule A expired after 2009. Although this will impact taxpayers with low state income taxes and those that purchased vehicles, boats or airplanes, it will have the greatest impact on taxpayers in states where there is no state income tax and thus no state income tax deduction to take in place of the expiring sales tax deduction.
If congress fails to act to re-instate these provisions in the tax code by the end of this year, the tax savings for millions of taxpayers will go off into the “Sunset.”
Here are a few more that are scheduled to expire that may directly affect your tax refund/bill for this upcoming tax season:
  • Alternative Minimum Tax – Way back in 2001, Congress increased the AMT exemption to keep middle-class taxpayers from being caught up in this punitive tax and have been inflation adjusting and extending it on an annual basis in recent years. However, they seem reluctant to adjust it for 2010. If they do not, the exemption will return to $45,000 for joint filers (down from $70,950 in 2009) and $33,750 (down from $46,700 in 2009) for unmarried individuals. This will generally snare middle-income taxpayers, and the tax bite can range upwards to several thousand dollars.
  • Teacher’s Classroom Supplies Deduction – The $250 above-the-line deduction for teacher classroom supplies expired after 2009.
  • Above-the-Line Education Deduction – The up-to-$4,000 above-the-line deduction for education expenses (tuition and fees) expired after 2009.
In my next writing, I will highlight some of the tax deductions that are set to expire that will affect many of us for the 2011 tax return. Stay Tuned!
E-File Florida is very happy to help you with questions regarding these “Sunset Rules”. Feel free to contact our office by calling 954-583-8534 or by email at info@efileflorida.com. You can also visit us on the Internet at http://www.efileflorida.com for more great tax tips and articles.
Esther Hastings, EA
E-File Florida helps individuals and small business owners to lower their tax bills and maximize their tax refunds. We actually enjoy getting to know our clients and have built a solid reputation of delivering excellent personal service while maintaining the highest level of integrity within the tax preparation industry. We welcome the opportunity to make you a Raving Fan!
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IRS CIRCULAR 230 Required Notice – IRS regulations require that we inform you as follows: Any Federal tax advice contained in this communication (including any attachments) is not intended to be used and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction as tax related matter(s).

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