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Expiring tax cuts might just do that

October 21, 2010

Not to run this expiring tax cuts situation into the ground, but this a tax blog.

So, from the be careful what you wish for file, Reuters reports that Republican victories in the midterm elections boost the odds that Congress will let the Bush-era tax cuts die at year's end. That possibility is, of course, just the opposite of what the GOP wants.

Polls indicate that Republicans will make substantial gains on Capitol Hill on Nov. 2. But those new members of Congress won't be seated until January 2011.

And action on the tax cuts is needed by Dec. 31.

In the two months that Democrats will still be in the majority, they aren't likely to be in a good mood as they get ready to hand over the keys to Congress to the opposition.

That would mean that any tax law changes and/or extensions would come in late January or early February 2011 at the soonest.

And there still will be a Democrat in the White House.

Obama has consistently argued for letting tax rates rise for wealthier Americans. The Administration points out that the hikes would affect only about 3 percent of taxpayers and that the U.S. Treasury needs the $700 billion in revenue the tax increases would generate.

But will Obama hold firm when more Republicans are in the House and Senate?

Stay tuned for the game of political chicken.

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TO WRAP UP 2026

It’s over! With October’s extended filing deadline behind us, it is now time to focus on year-end moves to reduce your 2026 tax bill. 

You’ll find ways to do just that on the Tax Tips page (see the More Tax Posts drop-down menu at the top of the blog), as well as the separate tax tip pages for each month, notably October through December. If you’re on the Tax Tips page, you’ll find a monthly list at the end of this column. If you’re on another blog page, you can head straight to the October tips; at the bottom of that tips page you’ll find links to all the other 11 months’ collections of tax advice.

Not to spoil what you’ll find in that tax advice, but it does cover such things as tax deductions for charitable donations, investment moves that could reduce tax due, and ways to max out your tax-favored retirement savings. 

Finally, as the year winds down, things get hectic. There are lots of other things to occupy our time, like the much more fun upcoming holidays. But don’t lose sight of taxes, since timing is key. To be of use, most tax moves must be made by the end of the tax year. That’s Thursday, Dec. 31, which also is the last business day of the year. 

So that you don’t miss that final tax year deadline, also keep an eye on the countdown clock below. It will keep you on top of just how much time is left to make important, tax-saving moves. (Note: I’m in the Central Time Zone, so adjust accordingly for where you live.)

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