Congress Finally Acts

The middle of December, and finally Congress passes a last minute change impacting virtually every taxpayer. Congress and the President agreed on an extension of the Bush Tax law with some additional clauses on December 6. We may not know all of the changes until after the first of the year, but I am going to cover as many as possible in the next few posts.

While most of the changes do not impact the 2010 taxes, some of the changes do impact most of our clients. The sales tax deduction expired December 31, 2009. It has now been extended through 2010 and 2011. This impacts all clients that are not in a state that has an income tax.

Some of the changes are really no change. In other words, they just changed the expiration date of previously passed legislation. Some of the changes are in fact changes from prior law.

Although most of the extension of current law expires on December 31, 2012, there are a few exceptions.

One of the exceptions is the itemized deduction for Mortgage Insurance Premiums, which was extended through December 31, 2011. The deduction is for qualified mortgage insurance paid during the year in connection with acquisition of a qualified residence. The deduction is phased out based on the taxpayers income.

In order to get this information out to our clients, we are only furnishing the minimal information that is available to us now. We will have more information in the future.