Home > Strictly TAXES! > Tax Increases ARE Coming~Unless Congress Takes Action!

Tax Increases ARE Coming~Unless Congress Takes Action!

Tax Cuts Are Scheduled To Sunset!
Normally, one would think that Congress would have to take some action to increase taxes. However, it is quite the opposite for 2011. If Congress fails to take action, there will be a tax increase affecting just about everyone in every tax bracket. In order to skirt a Senate rule that requires 60 votes to pass a bill that increases the deficit beyond a ten-year window, Congress passed the Bush tax cuts in 2001 and 2003 with most provisions designed to sunset this year.
Despite President Obama’s best effort on his vow of no new taxes for individuals earning less than $200,000 and families earning less than $250,000, stopping these tax increases from taking place will require Congressional action. However, not only are we in an election year – when most of our politicians tend to steer away from tax-related discussions before voting day – Congress is looking for ways to make up some of the budget deficit, and many legislators consider extending the current laws to be too costly. So, we may not see any action on tax increases or extensions until late in November, if then. Simply put, If congress does nothing to extend these tax cuts, we can all expect to pay more taxes! Over the next several postings, I will highlight some of these tax cuts that are scheduled to expire either in 2010 or 2011. I’ll begin with those that will affect us for the upcoming tax season. The first two are listed below:
  • 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.
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.

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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