Time for Fax Review

You must note the effects on two tax years as you mull over potential options...2009 and 2010. To be successful, you want to cut your total tax bill over both years, not just one. Most filers will benefit by accelerating their deductions from 2010 into 2009 and deferring income until 2010. But if you expect to be in a higher tax bracket in 2010, consider the reverse…accelerating income and delaying deductions. Income tax rates won’t change in 2010. The Bush tax cuts are set to lapse after 2010, raising the top rate back to 39.6%. Congress won’t act to accelerate that change. And any surtax on high-income folks, such as the one in the House’s health care overhaul legislation, wouldn’t be effective until after 2010.
Take a look at some strategies involving provisions set to lapse soon. First time home buyers won’t have to act by Nov. 30 to get a tax credit. Congress will extend the $8,000 credit for several months, well into 2010, so first timers will not have to hurry up and close their home purchases by Nov. 30. Prospective buyers who already own a home should wait a brief time to buy. Congress is working on a bill that expands the credit beyond first time purchasers, giving a $6,500 credit to buyers who’ve owned a home for five of the last eight years. This would apply to homes bought after enactment, which should occur by mid-Nov.