Epic failure in Washington is causing epic uncertainty for taxpayers. This week, Congress's special 12-member deficit-cutting committee failed to agree on even a broad outline for addressing the U.S.'s fiscal woes. It marked the third year in a row that taxpayers headed into December with major tax-code issues unaddressed.
The end of the year doesn’t just mean turkey, presents, and a bit of champagne; it also means end-of-year tax planning. That’s never fun, but this year even the Congressional Supercommittee failed to come to a decision.
As a result, we now are into December, without a clear idea of the major tax-code issues we’ll face in the coming years. Actually, and quite unfortunately, this is the third consecutive year that December has brought us such confusion, and with it, a different congressional squabble each year.
If you’re looking for assistance, there are many voices out there, like this piece from Forbes, “Yearend Tax Planning In Uncertain Times” and the Wall Street Journal weighs-in, too, with “The Tax Mess Deepens.” The steps you should take largely depend on your own financial position. Regardless, there are some key tax-code issues to bear in mind as they fight it out on Capital Hill.
By year’s end, Congress has to come to a decision about a host of programs. For example, the two percent Social Security payroll tax holiday (one that has meant extra money for a great many families), not to mention fixing the Alternative Minimum Tax (AMT) so that millions of taxpayers don’t end up ensnared in it for 2012 (many of them solidly middle-class).
To make matters even more “interesting,” these program decisions are on the plate for this month, this year. The real fun will be watching the battles to be waged next year (an election year, at that). The tax code has only been agreed upon until the end of next year, meaning that we have no idea what will happen and very little way to guess accurately.
Uncertainty is the bane of all tax-planning, whether you are planning for your estate or for your medical budget, but isn’t “uncertainty” the reason we plan in the first place?
Ah, isn’t it good to live in interesting times?
Reference: Forbes (November 30, 2011) “Yearend Tax Planning In Uncertain Times”
The Wall Street Journal (November 26, 2011) “The Tax Mess Deepens”