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Feel free to contact J. Haden Werhan, CPA/PFS, principal and owner of Thomas Wirig Doll, an accounting and wealth management firm that works with dentists. He can be reached at haden@twdadvisors.com or (877) 939-2500.
As I write, Massachusetts is sending a Republican Senator to Washington, D.C. for the first time since Edward Brooke served from 1967–1979. What’s this got to do with tax-law changes? A lot! Without making any political commentary, the facts are:
As I write, Massachusetts is sending a Republican Senator to Washington, D.C. for the first time since Edward Brooke served from 1967–1979. What’s this got to do with tax-law changes? A lot! Without making any political commentary, the facts are:
We don’t know how, or whether, the Massachusetts election will affect the outcome, but it is probably safe to say the debate will go on for a while longer. And this creates an uncertain environment for tax code in 2010 and beyond.
Uncertain times
Remember that ancient proverb, “May you live in interesting times?” When it comes to U.S. tax codes, 2010–2011 is one of those “interesting” periods in which the old becomes new again, and the new is hauntingly familiar.
You would think tax law changes enacted well into a calendar year would only affect future years. But since 1917, Congress has passed 14 laws with retroactive tax increases.
We don’t know what Congress will do in the coming months or how it might affect our 2010 taxes, but one thing is virtually certain: Your taxes are going up in 2011. This is because the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) is coming to an end this year. This law had brought sweeping changes to the tax code:
Now, just as we got used to the changes, EGTRRA is expiring. The law was designed for this limited 10-year period, after which everything reverts to the way it was in 2001. This year (2010) is the last year for EGTRRA, so it will give us the lowest taxes in the 10-year window as well as for several years prior. While we have had numerous tax bills since 2001, including Bush and Obama stimulus packages, starting in 2011, most of the tax law in effect in 2001 is reborn.
First, the good news
Let’s begin with 2010 tax considerations that can play in our favor.
The not-so-good news
Stay informed, stay in touch
Now, more than ever, your CPA/financial advisor should be your best friend, even if he or she must sometimes be the bearer of bad news. With all the changes in 2009 and depending on the planning and tax-savings opportunities you’ve engaged in so far, you may be happily or unhappily surprised by what you discover upon completion of your tax returns. Either way, carpe diem on future planning. Just as you would prefer seeing your patients regularly for preventive care well before more invasive treatment becomes necessary, your CPA/financial advisor can be of best use to you if you are in regular touch.
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