Tax Changes for 2009
By: Richard Schneider
Retired professor of accounting
What’s in store for 2009 when it comes to tax changes under the Obama administration? My tax services Kiplinger and RIA Check Point are weekly and daily tax news services and are the source for the following information.
When Barack Obama was elected there was and is an air of high expectation of a better future. He had promised tax relief for low and middle incomers, and an increase in tax for the wealthy, well lets see what the crystal ball says will happen.
1. Expanding the Earned Income Tax credit, increasing the income cap to qualify for the credit.
2. The Child Credit will be fully refundable. Currently the credit offsets tax and in certain cases where the tax is less than the credit, may be partly refundable depending on amount of tax and earned income.
3. No income tax for seniors with income less than $50,000. It is unclear what age qualifies for senior status, 50, 55, 60, 62, or 65. Will the $50,000 limit include the full amount of social security benefits?
4. A stimulus rebate, in the form of reduced tax withholding for workers, in stead of mailing out checks. This could happen as soon as February.
5. Prevention of the tax rate reduction on estates over $3.5 million, keeping it at 45%. This will help pay for some of the cuts.
6. Temporary fix for the Alternative Minimum Tax.
7. The maximum tax rate for long term capital gains and qualified dividends will increase to 20% from 15%, on a prospective basis. That is the change will affect gains realized from the date of enactment on, and not gains realized before that date.
8. In 2010 or 2011 there will be a restoration of the 36% and 39.6% tax rates for taxable incomes of over $250,000.
9. Pulling the plug on tax breaks for oil companies, related to oil drilling and production activities.
Remember these are guesses by the above tax services, and the actual future tax laws may differ considerably.
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