Once
again the idiots in Congress have put off dealing with the now infamous “tax
extenders”. And once again these idiots
will probably extend the entire lot for at least one more year at year-end.
But
should all of these tax benefits be extended, or, much “more better”, be made
permanent? I don’t think so. Rather than automatically extending them all
for a year, the idiots in Congress should review each one individually and determine
its “appropriateness” – and make permanent those that they determine to be
appropriate. Of course because , being idiots, they wait
until the very last minute each year they do not have the time to do anything
but temporarily extend them all.
Here
is a look at the more popular of the “tax extenders” that affect 1040 filers,
with my “thumbs up” or “thumbs down” vote -
EDUCATOR
EXPENSES - NO
This
$38 - $70 gift from Uncle Sam is a nice nod to teachers, paying for a dinner
out. But why do teachers
deserve this more than police officers or firefighters or nurses or other
public service employees? I see no real
reason why this should be continually extended, or made permanent.
DEDUCTION
FOR TUITION AND FEES - YES
While
the American Opportunity Credit generally provides the best tax benefit for college
expenses, and is available to more taxpayers due to the higher income
threshold, it is not available for graduate students. This deduction is available to graduate
students, and undergraduate students who have already claimed the AOC for the
maximum 4 tax years It is often “more
better” than claiming the Lifetime Learning Credit, and is available to more
taxpayers due to its higher income threshold.
For those reasons it deserves to be extended or made permanent. However, that being said, I firmly believe the
Tax Code should not be used for distributing government benefits. All education tax benefits should be removed
from the Tax Code. These benefits should
be delivered through the existing programs for student financial aid of the
Department of Education.
OPTION
TO DEDUCT STATE AND LOCAL SALES TAX - YES
This
provides a tax deduction for residents of states that do not have a state
income tax, and I have found that it often provides a better tax deduction for
retired seniors. It should be extended
or made permanent.
DEDUCTION
FOR MORTGAGE INSURANCE PREMIUMS – DEFINITELY NO
I
have absolutely no idea why this deduction was created – other than the
aggressive lobbying of the mortgage insurance industry. Mortgage insurance is life insurance, and
life insurance premiums are not a deductible expense, other than as an employee
benefit provided by employers. I believe
that potential homeowners should be encouraged to put more money down when
purchasing a home – and avoid the need for mortgage insurance. It certainly does not deserve to be extended
or made permanent.
DIRECT
TAX-FREE TRANSFER FROM AN IRA TO A CHARITY – DEFINITELY YES
This
allows retired taxpayers over age 70½ who do not need to take all or any of the
required minimum distribution (RMD) from their IRA for cash flow purposes, but
are statutorily required to do so, to avoid increasing their Adjusted Gross
Income by using the RMD to make a charitable contribution. By reducing AGI this tax benefit could also
reduce the amount of Social Security or Railroad Retirement benefits that are
taxed. This is the most “appropriate”
tax benefit of the lot and truly deserves to be extended or made permanent. {NOTE- One of the very serious problems with the custom of waiting until the very last minute to extend the extenders is that by the time the law is enacted it is too late to take advantage of this tax benefit.}
What
do you think?
TTFN
1 comment:
I am part time at a High School. Not enough hours to take advantage of the $250, but even it it were, I'd be ok to lose this. I can't argue that many jobs have unreimbursed expenses and allowing one special group to claim this makes little sense.
My hot button however, is the IRA charitable deduction. I am very pro this rule. Why is this (and other) bits of the code renewed year to year and not simply made permanent? It strikes me that this is one bit of code that helps those who aren't wealthy. My MIL doesn't itemize, but is very charitable. This rule let $4000 in donations benefit her by $1000. The well off itemize and get to use the deduction anyway.
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