Year End Tax Planning
Tax planning at the the end of 2009 is a little more complicated than in recent years due to pending legislation that we have to consider. Regardless, as this year comes to a close it is still a good idea to review your tax situation before the end of the year to determine if there are any moves that you can make to lower your 2009 tax bill before it is too late.
Congress is considering many items now. All of the following items are on the table and have to be factored into your plan: Health Care Reform, Additional Stimulus Bills, Extension of Tax Breaks.
Congress is working feverously to figure out a way to fund health care reform. A surtax on higher-income taxpayers is one proposal, another proposal is to charge a tax on high-dollar health care plans. Further, changes are being proposed to Flexible Spending Arrangements and Health Saving Accounts. Flexible Spending Arrangements are likely to be capped at $2500, and the additional tax for HSA withdrawals before age 65 that are not used for qualified medical expenses could double. Other changes are proposed to these plans, so we will have to watch them closely.
Congress will most likely extend unemployment benefits before year end. They have already extended the new home buyer credit. Many other extensions are in the works.
These items have to be factored into your tax plan. You also need to consider the effects of the Alternative Minimum Tax in your plan. Not to mention possible tax ramifications of debt restructuring, or debt relief.
The sooner you address these issues the better chance you will have to lower your tax bill.