Bush tax cuts hang in the balance by Timothy M. Steffen, CPA, CFP, financial and estate planning manager for Robert W. Baird & Co.’s Private Wealth Management group.
While the November election produced significant gains for Republicans, the future of the Bush tax cuts is unlikely to be resolved any time soon. Newly elected officials who may have campaigned on the issue will not take office until January, and those still holding office are not likely to have the motivation or time to pass legislation extending the 2001 and 2003 tax cuts, which are scheduled to expire Dec. 31.
Virtually all taxpayers should plan for higher federal income taxes in early 2011. We anticipate that the Bush-era tax cuts will be allowed to expire. We expect Congress to revisit the issue in January, but would not be surprised if legislative changes are a long time in the making. We do expect any eventual changes to be made retroactive to the first of the year.
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