TAXES AHOY

What Gummint Do

In a recent tax planning meeting with one of our clients, we shocked them with what their income tax future looked like for 2013 if -- on the off-chance -- Congress continues to do nothing to provide a long-term permanent set of tax laws. [Full] They had no idea what tax breaks were expiring this year and next year, and how much it would cost them personally in extra income tax. But they aren't alone, many Americans and even tax professionals aren't aware that their tax bill could rise dramatically next year. [...] Major Individual Income Tax Benefits Expiring 12/31/2011: • Personal tax credits applied against income tax no longer apply • Higher alternative minimum tax exemptions revert back to extraordinarily-low thresholds • $250 school teacher expense deduction ends • Mortgage insurance premium deduction expires • State and local sales tax deductions expire • Tuition and related fees deduction end • IRA to charity tax-free transfers stop • 2% Social Security tax reduction ends Major Individual Income Tax Benefits Expiring 12/31/2012: • Marriage penalty equalization ends • Dividends taxed at capital gains rates removed, taxed at regular rates now • Capital gains low tax rates expires • Removal of itemized deduction phase out for higher income Americans • Removal of personal exemption phase out for higher income Americans • Child care deduction limit of $3,000 reverts to $2,400 • Child credit reduces from $1,000 per child to $500 per child • Low 10% tax bracket for low income Americans is eliminated • Lower income tax rates and smaller brackets expires • Refundable adoption credit and reduced deduction • American Opportunity college education credit expires • Major reduction in earned income credits and refunds • Income tax exemption for debt forgiven on home foreclosures and repossessions • Deduction for student loan interest ends • Education IRA limit drops from $2,000 to $500 In summary, because of tax laws expiring this year and next, we estimate that the Smiths will owe $3,598 more in income tax in 2013 than in 2011 with no change in their income. All of this says nothing about the massive Obamacare and other new taxes in the pipline.  Do you think this gummint is afraid of us?  Doesn't appear so.