As with bad cans of tuna, if you aren't aware of the danger of expired goods you could be in trouble. Here are some potential sources ofdifficulty for planners and their clients:
Tax Breaks that Expired at the End of 2009
* Deduction for classroom expenses for educators,
* Tuition and fees deduction for college,
* Additional standard deduction for property taxes,
* Additional standard deduction or itemized deduction for sales tax paid on a new vehicle,
* Itemized deduction for state and local sales taxes in lieu of state income taxes,
* Tax-free exclusion of the first $2,400 in unemployment benefits.
* Tax-free exclusion of IRA funds donated directly to charity,
Tax Breaks Expiring in 2010
The following provisions in the tax code will expire in the year 2010:
* Homebuyer tax credit for new or repeat home buyers expired on April 30, 2010. Military personnel can take advantage of this tax credit through April 2011.
* Tax credit for hybrid and alternative fuel vehicles expires for all makes and models at the end of 2010,
* Itemized deduction for mortgage insurance premiums,
* Qualified dividends taxed at capital gains rates,
* Reduced long term capital gains tax rates of 5% or 15% will revert to rates of 10% or 20%,
* All provisions part of the Economic Growth and Tax Relief Reconciliation Act of 2001. In particular, the current tax brackets of 10%, 15%, 25%, 28%, 33%, and 35% are scheduled to expire at the end of 2010. The marginal tax brackets will revert to their pre-2001 levels, which were five tax rates of 15%, 28%, 31%, 36%, and 39.6%.
These breaks are presently being debated in Congress. We've complained about the difficulty that advisers face in planning for their clients based on the late action on tax bills. Stay tuned.
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