Tax-Free 2010? Humbug!
Happy New Year from Lynam & Associates!
So what happened to the estate tax? Temporarily, it’s gone. Congress never enacted a new estate tax, and the old one expires at midnight tomorrow. The current estate tax disappears completely in 2010; in 2011, the estate tax will come back in its pre-Bush Jr. form with a top rate of 60% and a low $1-million exemption. Unfortunately, to take advantage of the disappearing estate tax you will need to die in 2010 and hope Congress back on earth does not create a new tax.
A lot of tax write-offs and credits will also expire at the stroke of midnight. Among those is the stepped-up basis for inherited property and stocks, which is replaced by a new system that allows you to step-up the basis of inherited property or stock up to $1.3 million, with an extra $3 million if you inherit the assets from a spouse. The research and development credit will phase out, along with college tuition, teachers’ supplies, and state sales tax write-offs. Senior citizens received no cost-of-living increase in their Social Security checks while some Medicare premiums have been raised.
The Senate did renew one healthcare-related tax break: the COBRA subsidy, which subsidizes a large portion of health insurance coverage for those who are out of work. The COBRA subsidy is extended for those losing jobs up until February 28, 2010, instead of expiring on January 1, and the new law extends coverage for fifteen months, rather than nine.
May all our readers have a great 2010!