UPDATE OF TAX AND BENEFIT BILLS MOVEING THOUGH CONGRESS

FIRST TIME HOME BUYER CREDIT
Currently the $8,000 tax credit will expire on November 30, 2009. Congress is expected to extend the expiration date to January 31, 2010 and there will not be a requirement for the sale to be completed, just a signed contract. There is extra relief for members of the Armed Forces who are not able to take the credit because of extended duty overseas; they have until the end of 2010. There are amendments to include people who are not first time home buyers and increase the credit to $15,000, but not expected to pass

MEDICARE PART B PREMIUMS
The increase in higher Medicare Part B premiums is expected to be blocked by Congress. In addition an extra payment to beneficiaries is expected be OK’d this fall of $150 to $250 per beneficiary.

UNEMPLOYMENT BENEFITS
It appears an extension of unemployment benefits for 13 weeks is a done deal. This will help those who have had been unemployed more then 12 months. However to pay for this an additional 0.2% Federal unemployment surtax on employers will be extended for one year through 2010.

OTHER INCOME TAX BREAKS TO BE EXTENDED
Research and Development Tax Credit, write-offs for state sales tax, college tuition, and teachers’ classroom supplies and tax-free IRA payouts to charity are expected to be extended through 2010

INCOME TAX BREAKS TO RE REPEALED
Waver of mandatory payouts from IRAs and plans for people over 70 ½ and the repeal of the estate tax. Currently the estate tax is to disappear in 2010 and Congress is expected to keep it. However, the $3.5 million exemption for 2009 will be kept as well as the estate tax rate of 45%.

AMT EXEMPTIONS
AMT exemptions are expected to be raised so they will not revert to pre-2001 levels.

For more information, call John Ellis CPA at The John Ellis Company [310-426-2101]