US Taxpayers Facing Uncertain Tax Planning Future, Says CCH

by Glen Shapiro, LawAndTax-News.com, New York

19 September 2008

As 2008 heads into the fourth quarter, taxpayers who want to minimize their tax burden for this year and next have a range of options, but also face a considerable amount of uncertainty, according to CCH, a Wolters Kluwer business and a leading provider of tax, accounting and audit information.

"There are many things the average person can do to lower this year's taxes," said Mark Luscombe, CCH principal federal tax analyst.

"But more than most years, many people will have to keep an eye on Washington to see how their returns will be affected. Congress has yet to act on the alternative minimum tax exemption for 2008 and the fate of several popular tax benefits that expired at the end of last year is up in the air. The presidential election adds even more uncertainty."

Until Congress approves new tax extenders legislation, CCH warns that taxpayers cannot take an itemized deduction for state and local sales tax or the qualified higher education expenses deduction, an "above-the-line" deduction valuable even if taxpayers can't itemize.

In addition, the ability of educators to take an above-the-line deduction for school supplies expired at the end of 2007, and tax credits for many types of energy-saving home improvements ended with the 2007 tax year, although there is a chance they will be extended before year-end.

Also uncertain is how many people will be subject to the alternative minimum tax (AMT). In 2007, the AMT exemption, which largely determines who falls under the alternative system, was set at USD44,350 for single individuals and USD66,250 for married couples filing jointly, but this year these amounts reverted to just USD33,750 for individuals and USD45,000 for married couples filing jointly.

Congress is expected to enact another round of temporary relief, but just when that will happen and whether the relief will be enough so that people not previously subject to the alternative tax will continue to escape its clutches is uncertain.

According to CCH, the best bet is that the AMT will continue in something like its present form, with exemption amounts a bit higher than the ones in 2007, at least for the 2008 tax year.

Recommended