Well, guess what? The House finally let the tax bill come to a vote. Nancy got religion I guess, so either it will be passed as is or will be passed with a higher estate tax, which means it will go back for reconciliation, which could scuttle the whole deal. Another cliff hanger! Well if something happens I will let you know.
Brian’s Tax Musings
Well, as expected, the bill to extend the Bush Tax Cuts and Unemployment Benefits (the tradeoff) will actually come to the Senate floor to be voted on soon. 83 senators, obviously realizing this will be the best deal they can get this year, voted to vote on it soon (next week I think). While there is still talk about a problem in the House, I don’t see how Democrats can stall the bill, because if they do, as soon as the new congress takes over next year, I have heard the first priority is to pass this stuff, maybe without the Unemployment extension? Nancy would be making a mistake stalling this bill, so stay tuned for the next exciting chapter of “As Congress Turns.”I do think this bill will be passed eventually the way it is, maybe with some minor changes, but you never know – soap operas do have unexpected cliffhangers.
Brian’s Tax Musings
Remember that up until April 15 you can make a deductible ‘traditional IRA’ contribution of $5000 ($6000 if over 50 years old) for yourself if single and $5000 ($6000) each if you are married. You need at least the amount of the contribution in earned income (salaries, self employed income) to qualify. If you are in the 25% tax bracket (fed & state) it will save you $1250 for each $5000 contributed, so it only costs you $3750 in dollars to contribute the $5000. If you have a retirement plan at your work there are income limits to make the contribution. If you make less than $56000 single or $89000 married your contribution will start to phase out. Let me know if you want to discuss this at bstonercpa@sbcglobal.net Or you could make a Roth IRA contribution. There is no upfront tax deduction but if you don’t withdraw the money for the longer of 5 years or you turn 59 1/2, all withdrawals are tax free. A traditional IRA withdrawal is 100% taxable since you got a tax deduction up front for your contribution. This is tax deferral. A Roth is totally tax free. If you expect (like me) that [...]