Recap of what President Obama is Proposing in his 2010 budget
Wednesday, March 25, 2009
One of our goals at the firm is to keep you up-to-date on any important tax information. Below is a recap of what President Obama is PROPOSING in his fiscal year 2010 budget from a tax standpoint. As you review the tax changes for business and individuals, in each case, the year in parenthesis is when the change is proposed to begin.
Tax Changes for Business
▪ Make the research tax credit permanent
(2010).
▪ Expand the net operating loss carryback
(2011).
▪ Eliminate capital gains taxation on small
business (2014).
▪ Repeal LIFO (2012).
▪ Codify the economic substance doctrine
(2009).
▪ Require information reporting for rental
payments (2010).
▪ Tax carried interest as ordinary income
(2011).
▪ Reinstate Superfund Taxes (2011).
▪ Repeal all of the following oil and gas tax breaks: expensing of intangible drilling costs; deduction for tertiary injectants; passive loss exception for working interests in oil and gas properties; manufacturing deduction for oil and gas companies; and percentage depletion (2011).
Tax Changes for Higher Income Individuals
These changes would be proposed to apply to taxpayers earning over $250,000 (married) and $200,000 (single)
▪ Reinstate the 36% and 39.6% top tax rates
(2011).
▪ Reinstate the personal exemption phase
out and limitation on itemized deductions
(2011).
▪ Impose a 20% tax rate on capital gains
and dividends (2010).
The Administration’s document separately discusses a proposal to limit the tax rate at which higher-income individuals can take itemized deductions to 28%, with no indication of when this change would take effect. Additionally, the Administration is widely expected to propose keeping the estate tax at some level. Under current law, the estate tax won’t apply for 2010, but will be reinstated, at 2001 levels, in 2011.
Other Tax Changes for Individuals
▪ Make permanent the Recovery Act’s
refundable $400/$800 “making work
pay” tax credit for 2009 and 2010.
▪ Make permanent the Recovery Act’s liber-
alized child tax credit rules, which under
current rules apply for 2009 and 2010
only.
▪ Make permanent the Recovery Act’s “new
American opportunity tax credit” for higher
education expenses, which under current
rules applies for 2009 and 2010 only.
▪ Eliminate the Advanced Earned Income
Tax Credit (2010).
▪ Expand the saver’s credit and automatic
enrollment in IRAs and 401(k)s (2011).
The Administration’s document also separately discusses a proposal to establish “automatic workplace pensions, on top of and clearly outside Social Security…” Employees would automatically enrolled in the workplace pension plans (unless they opt out). Those employers not offering retirement plans would be required to enroll their employees in a direct-deposit IRA (but employees apparently would be given an opt-out option).
________________
by Larry Brodnik, CPA
Sr. Tax Partner, Greenwalt Sponsel & Co.
www.gscocpa.com
at 7:08 AM Link to this Article 0 Comments
Comments:
Tax Changes for Business
▪ Make the research tax credit permanent
(2010).
▪ Expand the net operating loss carryback
(2011).
▪ Eliminate capital gains taxation on small
business (2014).
▪ Repeal LIFO (2012).
▪ Codify the economic substance doctrine
(2009).
▪ Require information reporting for rental
payments (2010).
▪ Tax carried interest as ordinary income
(2011).
▪ Reinstate Superfund Taxes (2011).
▪ Repeal all of the following oil and gas tax breaks: expensing of intangible drilling costs; deduction for tertiary injectants; passive loss exception for working interests in oil and gas properties; manufacturing deduction for oil and gas companies; and percentage depletion (2011).
Tax Changes for Higher Income Individuals
These changes would be proposed to apply to taxpayers earning over $250,000 (married) and $200,000 (single)
▪ Reinstate the 36% and 39.6% top tax rates
(2011).
▪ Reinstate the personal exemption phase
out and limitation on itemized deductions
(2011).
▪ Impose a 20% tax rate on capital gains
and dividends (2010).
The Administration’s document separately discusses a proposal to limit the tax rate at which higher-income individuals can take itemized deductions to 28%, with no indication of when this change would take effect. Additionally, the Administration is widely expected to propose keeping the estate tax at some level. Under current law, the estate tax won’t apply for 2010, but will be reinstated, at 2001 levels, in 2011.
Other Tax Changes for Individuals
▪ Make permanent the Recovery Act’s
refundable $400/$800 “making work
pay” tax credit for 2009 and 2010.
▪ Make permanent the Recovery Act’s liber-
alized child tax credit rules, which under
current rules apply for 2009 and 2010
only.
▪ Make permanent the Recovery Act’s “new
American opportunity tax credit” for higher
education expenses, which under current
rules applies for 2009 and 2010 only.
▪ Eliminate the Advanced Earned Income
Tax Credit (2010).
▪ Expand the saver’s credit and automatic
enrollment in IRAs and 401(k)s (2011).
The Administration’s document also separately discusses a proposal to establish “automatic workplace pensions, on top of and clearly outside Social Security…” Employees would automatically enrolled in the workplace pension plans (unless they opt out). Those employers not offering retirement plans would be required to enroll their employees in a direct-deposit IRA (but employees apparently would be given an opt-out option).
________________
by Larry Brodnik, CPA
Sr. Tax Partner, Greenwalt Sponsel & Co.
www.gscocpa.com
at 7:08 AM Link to this Article
Comments:
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