12/12/2011

It is said that tax law changes on average 23 times a day…at least it SEEMS like it does.  Congress passes major legislation, the IRS issues rulings and tweaks what Congress has done, and the courts try to figure it all out.  Day in and day out.  Excluding Saturdays and Sundays.  And a couple of major holidays.

So – here we arrive at the tail end of 2011, which was relatively quiet for tax law–thus, less than 23 changes a day.  Congress, however, is still squabbling over a couple of issues, so we expect new legislation before the bell tolls on December 31.  But for now, here is a list of what will expire if Congress does little or nothing by year end – and that is, fortunately or unfortunately (depending on your politics), becoming their hallmark.

Keep in mind as you peruse this list – you may be eligible to take advantage of these tax tidings of good cheer until the end of the year (and maybe longer….stay tuned to the blog):

•  Social Security Tax “holiday” for employees and the self- employed (the 2% tax savings you have been enjoying all year goes through Dec 31 – and this is one of the major issues being debated in Congress right now.)
• Tax free withdrawals from your IRA if transferred directly to a charity AND you are at 70.5 or older
•  “Refundable” adoption credit – “refundable” means you could get a refund of more than you paid in on your withholding or estimates if you completed a qualified adoption
• Energy-efficient improvements credit for your personal residence – be aware that this is limited to a life-time credit of $1500, so if you’ve taken credits in the past…you may not be able to claim the full $500 for 2011
• Qualified higher education deduction  up to $4,000 (to help those who may not qualify for the sizable education credits)
• Teacher’s deduction of $250 for consumable school supplies
• Choice to deduct either state income tax or local sales tax – this is an itemized deduction.
• Qualified home mortgage insurance premium deduction – an itemized deduction
• Higher alternative minimum tax exemptions (why doesn’t Congress just FIX this problem once and for all??? Oh, yeah – the govt collects a lot of tax from unsuspecting taxpayers with AMT, the stealth tax.  It is, by the way, basically a flat tax…..35% flat).
• Qualified small business stock – 0% tax rate on the capital gains on sale of qualified stock
• Conservation easements – tax advantages if donated to a charity
• Washington DC residents:  first time homebuyer’s credit

What about BUSINESS breaks expiring?  We will post that list to the blog tomorrow.  Then, in the following days, watch for some details about these and other breaks to help you decide if any of them may benefit you.   It is easy to register for our blog — see the sidebar to the right, scroll down to Email Subscription and pop in your email address.  It’s free and we will not bother you with advertising nor will we ever share your email address.

We urge you to contact us or your tax professional as soon as possible if you have situations that may be improved by planning and action taken now.  Once the bell starts gonging, the year is closed—and so are a number of planning opportunities.