Estate Tax Nightmare Looming
True to form, the turkeys presently housed in Congress have allowed themselves to become painted into a corner–having allowed January 1, 2010 to come and go without addressing the issue of how to handle the estate tax. Recall that pursuant to the “Bush Tax Cuts” of about a decade ago, 2010 was long ago slated to be a single year in which the estate was gone – “repealed,” only to return in 2011, automatically, unless Congress moved to the contrary.
Since nobody wants 2011 rules to revert to the onerous setup which prevailed BB (before Bush), Congresspersons galore are now trying to figure out what in the heck to do – and we hear from a recent Kiplinger Tax Letter, that they are actually planning to retroactively reinstate the estate tax to January 1, 2010.
Now needless to say, that isn’t going to make life very pleasant for the heirs of folks who have passed away in 2010 since opening day – some even think such a move would be unconstitutional. (But that hasn’t slowed Congresspersons down before, now has it?) We can hardly wait for the lawsuits to be launched by large estates if/when this one comes down the pike.
And to make matters even more convoluted, Kiplinger notes that there’s even a proposal floating around which would give estates a choice for 2010: pay using the 2009 rules ($3.5 million exemption and full basis step up) or take advantage of the one year repeal, but pay future income taxes without consideration of fair market value basis step up in assets bequeathed.
So, while Congress fiddles, the rest of us out here in the real world – namely, states and localities, continue to burn as a result of the recession. Which is why more than a few are enacting “short term” tax increases. You know – rules which ostensibly impose taxes for only a short period of time until things return to normal.
Right – when have you ever seen a state allow such a “short term” measure to lapse?
And while you’re paying and/or planning to pay all of your taxes (short term, or otherwise), don’t forget that someday you may actually want to retire, which means you had better stash away a few acorns for the future.
Unfortunately, however, it seems that too many of us aren’t doing so – a survey recently released by TD Ameritrade reveals that some 57% of us think we are either “a little” or “far” behind in saving for retirement. And when asked why, 56% say they have little or no dough left over after paying the regular bills (including taxes!). Some 42% of men cited “outliving savings” as one of their top two concerns as they approach retirement.
But why should we worry–with people like Betsy Markey (D-CO) in the House, spending their time drafting and voting on resolutions about beer? You say you have problems? The country has problems? Fear not – let the House of Representatives spend their time and resources passing resolutions celebrating beer – “We’ve got quite a number of microbreweries and entrepreneurs that are creating jobs, and we wanted to celebrate that this is a craft,” quoth Markey.
And we actually pay these people……?
CONSULT YOUR TAX ADVISOR – This article contains general information about various tax matters. You should consult your CPA regarding the implications to your own particular situation.
Jeff Quinn, the author of this article, is a shareholder in Ashley Quinn, CPAs and Consultants, Ltd., with offices in Incline Village, and Reno. He is also a contributor to the recently published 13th edition of Tax Savvy for Small Business, published by Nolo. He can be reached at 831-7288, and welcomes comments on his blog www.ashleyquinncpas.com/blog.