I certainly agree with Richard.
For one, Congress is “chomping at the bit” to pass another “stimulus” bill, which may well be needed. It will no doubt include new tax cuts and benefits. Let us pray that it does not include any more GD (like extensions) rebates!
Even without the desire to pass a new stimulus bill there will be a major tax Act passed in 2009.
We are fast approaching the “sunset” of all the tax changes passed during the early Bush years. As it now stands, on January 1, 2011 the Tax Code will go back to the way it looked before George W took office. I expect, regardless of who the new Commander-In-Chief is, there will be attempts to make permanent all or parts of what has become known as the Bush tax cuts. Even Obama wants to keep some of the tax cuts.
One specific area of concern is the federal Estate Tax, also called by some the “death tax”. While repeal is probably too much to expect, there will certainly be big changes in store. While I am not a supporter of the concept of the estate tax, I want to make absolutely sure that the concept of “stepped-up” basis remains intact. It would be a true nightmare at tax time if inherited property had a “carry-over” basis. As it is now most taxpayers have no idea what they paid for an investment 5 years ago, let alone what their parents or grandparents paid for something 25 or 50 years ago!
Then there is the issue of the dreaded Alternative Minimum Tax (AMT). Congress has been passing an annual one-year “patch” for the past several years, on occasion waiting until literally the last minute to do so. The House Ways and Means Committee tried to completely abolish the AMT earlier this year, replacing it with a tax “surcharge”, but without success. Let us hope that the newly elected Congress will once and for all address this problem and realize that, as I have been saying all along, like Frankenstein in the old Hammer films, the AMT Must Be Destroyed!
While I will not be holding my breath, I would sincerely hope that when considering tax law changes next year the new Congress seriously looks at making the system simpler and fairer. McCain has proposed giving taxpayers the choice of calculating their liability under the current system or a simpler, flatter one. As I have said time and again, forget the current system – make the simpler one the only one.
Any change to the Tax Code is good for the tax preparation business. The 2010 tax filing season, when 2009 tax returns are prepared, should prove to be a very profitable one for those in my profession.