Tuesday, July 06, 2010

Up in the Air: Your Taxes

The year is now half over, and a handful finance experts have taken note of the huge tax to-do list on Congress’ agenda for the rest of the year. The Wall Street Journal recently put together a detailed and lengthy list of the tax issues Congress is scheduled to take on in the next six months. You can find a section of the WSJ article on the topic below, or click here for the full text.

"I've never seen so many tax issues that need to be addressed in so little time," says Lindy Paull, a former top congressional tax staffer now with PricewaterhouseCoopers.

If lawmakers don't act, estate taxes will rise, the alternative minimum tax will hit millions more taxpayers, and many useful benefits will expire. Tax rates also will rise for all, and for investors the top rate on dividends will jump to nearly 40% from 15%.

Congress has fewer than 40 working days left before the November election, with no lame-duck session scheduled.

Legislation is notoriously unpredictable, but here is where the big issues stand. If you are following the play by play, keep in mind that the Senate has been the bottleneck this year because of its leaders' difficulty in mustering a filibuster-proof 60-vote majority.

Estate tax. The now-lapsed estate tax will return in January 2011, with a 55% top rate and a $1.2 million exemption per individual, unless lawmakers act. It will hit about 44,000 estates, eight times as many as the 2009 version of the tax, according to the nonpartisan Tax Policy Center.