Guessing Your Tax Bill

We're past the half-way mark of 2010. For those whose primary income comes from wages or salary, your tax payments are taken out of your check. But for many they must estimate their future tax bill and make estimated payments. The second one of those is now late - it was due June 15.

Problem is, what will your taxes be? This is not the normal issue of the year not being over. That is easily resolved by making estimated payments for the quarter based on income of the quarter.

No, this is a bigger problem. Many tax provisions are expiring (or expired) and while we expect these to be renewed, Congress has not done that yet. Will they? This year? Next year? Who knows - yet you need to know that for estimating the tax liability.

So what kinds of things are we talking about?

• Tax on dividends
• AMT (typically a yearly adjustment - but how much?)
• Capital gain rates (The President promised no change for incomes below $250k/year. OK, make that $200k/year. Well, maybe $175k/year. But Congress hasn't balanced the books on those provisions yet.)
• Energy credits (not all, but some)
• Direct charitable contributions from your IRA (over 70.5 years of age)
• Estate tax issues
• Property tax deduction with the Standard Deduction (not itemizing)
• Educator income adjustment ($250 for classroom supplies)
• College tuition income adjustment (not the credits - that's different)

These are but a few that impact individuals. Sure, there has been a bill or two introduced to address various sets of these, but none have gone very far, and most get pet project attached that ensure they will not pass without time-consuming changes.

Now Congress is about to take off for the summer, and then there will be the election recess, and, well, it looks like a bunch of stuff might hit in December from the lame duck Congress. That means the IRS will have little time to update all the forms, and the problems will just ripple from there....

One would think those in Congress didn't have to pay taxes or worry about such things. Wait, maybe that's too close to home........