Will this be the last year of the Bush-era tax cuts? For now, uncertainty remains over whether Congress will extend all or some of the tax cuts and incentives set to expire at the end of the year. CCH has issued a new Tax Briefing looking at sunsetting tax benefits and what taxpayers should know when planning for next year. CCH, a Wolters Kluwer business is a leading global provider of tax, accounting and audit information, software and services.
So far, no resolution is in sight and answers may not come until after the November elections. Two years ago, President Obama and Republican lawmakers agreed to generally extend the Bush-era tax cuts along with the so-called tax extenders for two years in the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 (2010 Tax Relief Act). But a longer-term extension comes with a high price tag. The Congressional Budget Office (CBO) has estimated that extending all of the “Bush-era” tax cuts would cost $2.84 trillion over 10 years.
“The decision is more complicated this time around because of mandatory reductions in federal spending that were introduced in the Budget Control Act of 2011,” said CCH Principal Federal Tax Analyst Mark Luscombe, JD, LLM, CPA. “When you combine all that with a still-recovering economy and a Congress that has difficulty seeing eye-to-eye on tax legislation, it’s easy to see why people are using terms such as ‘fiscal cliff’ and ‘taxmageddon’ to describe what the impact could be from the expiration of numerous tax breaks, as well as implementation of automatic spending cuts.”
What’s at Stake?
Tax topics covered in the Briefing impacted by end-of-year sunsets include:
- Income tax rates for individuals;
- Alternative Minimum Tax (AMT), (Relief expired at end of 2011);
- Marriage penalty relief;
- Capital gains and qualified dividends tax rates;
- Child and dependent care tax credits;
- Education-related tax incentives;
- Estate and gift taxes; and more.