by Richard Schneider
Emeritus Professor of Accounting
Winona State University
Here are a few things we expect congress to do prior to year end. Estate Taxes: Currently the first $3,500,000 is passed free of tax, but a quirk in a prior law would allow the estate tax to expire at December 31st, 2009, and in 2011 revert to older limits of a $1,000,000 tax free. Congress is expected to let neither one happen, and extend the 2009 limits and rates to 2010 and beyond.
Stimulus incentives expiring: If the economy does not improve congress is expected to extend some of the following expiring incentives:
$8,000 credit for first time home buyers set to expire November 30th.
$2,400 exclusion of unemployment compensation – expiring Dec. 31st.
Deduction for sales tax on a purchase of new vehicle – expiring Dec. 31st
There are tax breaks that will expire on December 31st, which congress should extend.
Tax deduction for college tuition.
Deduction of teachers’ classroom expenses.
Tax free direct transfers from IRAs to charity.
Increasing tax rates for higher income taxpayers. Currently a house bill includes a surtax of 1% on incomes over $350,000 for couples and $280,000 for singles, and a surtax of 5.4% on incomes over $1,000,000 for couples and over $800,000 for singles.
This does not totally roll back the tax rate breaks given to high income taxpayers during the Busch years. The roll back may be completed after 2010.