Apr 19, 2007

Did You Get A Tax Refund

There are several issues before Congress that could cost you thousands. The current hot button issue is the AMT. The Alternative Minimum Tax is estimated to add $2,000 to 23 million Americans tax bill this year (2007 tax year).

Alexandra Marks and Ron Scherer, staff writers for The Christian Science Monitor write an excellent article that should be read if this interests you. From the article:

“An estimated 4 million Americans will be subject to the higher AMT this year. The number would have been 11 million, but Congress approved a temporary patch last year. Unless lawmakers apply another patch or pass a comprehensive reform, that number will jump to as many as 23 million people for the 2007 tax year.”
Over on the Captain’s Quarters blog, Chris Muir, who does Day-By-Day Cartoon Inc. pokes fun at the situation in Congress.

On the Heritage Foundation website, Andrew Grossman is Senior Writer and Editor at The Heritage Foundation, penned an article back in November, 2005, When Would the President's Tax Cuts Expire? The following is a list, from that article, of the taxes cuts that have already or will run out:

• Bonus Depreciation: This provision, which changes depreciation schedules for businesses in a way that encourages investment, expired on January 1, 2005.

• Alternative Minimum Tax: Exemptions will decrease by $6,500 per filer on January 1, 2006.

• Small Business Expensing: On January 1, 2008, the maximum amount that a business may deduct will fall from $100,000 to $25,000, which will not be indexed to inflation. Also on that date, the cap for the value of qualifying property will shrink from $400,000 to $200,000, making it more difficult for small businesses to take advantage of this deduction.

• Capital Gains: Rates will rise to 10 or 20 percent, depending upon income, on January 1, 2009.

• Child Credit: This credit will shrink from $1,000 to $500 per child on January 1, 2011.

• The 10-Percent Bracket: This bracket will be eliminated on January 1, 2011, raising the income tax burden of many workers by 5 percentage points.

• The 15-Percent Bracket for Joint Filers: On January 1, 2011, the upper limit of this bracket will shrink from 200 to 167 percent of the upper limit for single filers, creating a marriage penalty.

• Standard Deduction for Joint Filers: On January 1, 2011, this will shrink from 200 to 167 percent of the standard deduction for single filers, creating a marriage penalty.

• The Estate Tax: The top rate for this tax will increase to 60 percent on January 1, 2011, and the value of an estate exempt from taxation will shrink to $1 million, which is less than it is today.

• The Income Tax: Rates will increase between 3 and 4.5 percentage points in each bracket on January 1, 2011.

• Dividends: Rates will rise to match standard income tax rates on January 1, 2009.

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