Be prepared to pay more in IRS taxes. Democrats; focusing only on a health care program which most Americans do not want, have allowed 50 key tax breaks to expire without renewing them. These key deductions from the Bush administration expire at year's end unless renewed. Democrats allowed them to expire.
The Bush administration's key tax breaks are currently in limbo, thanks to a Democrat-controlled Congress. Their lack of action is placing individuals and businesses in a bind of uncertainty.
Most of the fading-out 50 tax deductions may be reauthorized retroactively, but the late renewal will cause an inconvenience for some taxpayers but not the same sort of mess as Congress' failure to resolve the future of the estate tax. The estate tax will expire Dec. 31, and Democrats are pledging to resurrect it retroactively, leading to all sorts of potential legal problems, as well as some planning opportunities for certain families.
Among the expiring tax deductions are the research tax credit and an annual alternative minimum tax "patch," which keeps 23 million additional middle-income Americans from being forced into calculating and paying the dreaded AMT. (For 2009, with the patch in place, 4 million upper-middle-income and high-income families will pay the AMT.)
Other tax breaks are the deduction for state and local sales taxes for itemizers (which benefits mainly residents of states that don't impose an income tax); the additional $1,000 deduction for real-estate taxes for people who claim the standard deduction; the $4,000 deduction for college tuition; and a $250 deduction for teachers who spend their own money on classroom supplies.
With the budget deficit growing, even if some or all of these 50 key deductions are restored, other Bush administration tax cuts set to expire at the end of 2010 may be axed by democrats and advisers to Obama in the search for tax revenues.
