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NEW ECONOMY, NEW TAX LAWS

Written By: Alan A. Lips, CPA
Published By: Aventura News 
Date: October 2004

Natural disasters translate to current income tax relief and current political events will certainly impact our tax future.

All the stress and inconvenience of the hurricanes has proven to be beneficial for taxpayers in Florida – well – at least from an IRS perspective.  As a result of Hurricane Francis, the IRS has granted tax relief for Florida ’s hurricane victims.  The relief is extended to taxpayers residing in Miami-Dade, Broward and Palm Beach counties among many others.  So what does this mean for you?  If you have not filed your personal, corporate or partnership income tax returns for 2003 as of yet, the due date has been extended to December 30, 2004 .  Even more exciting, the payment of any taxes due is extended as well and no additional penalties or interest will accrue from September 3, 2004 until the end of the year.   So you now have the use of that money for an additional four months – better in your hands than the IRS!  This also includes those quarterly estimated tax payments (the 3^rd quarter estimate that would have been due September 15^th) that many of you have become dreadfully accustomed to paying.

As we head into the presidential elections, one topic on the agenda is how our taxes may be affected.  Taxpayers should consider the more recent changes enacted over the last couple of years: Reduction in income tax rates (the highest bracket reduced from 39.6% to 35%); long-term capital gains rate reduced from 28% to 15%; and benefits to businesses such as the 50% bonus depreciation and the annual expensing election of $100,000.  Much of this is scheduled to change. Many of these are not permanent changes but rather have short lives before reverting back to the prior law. 

So how are we going to be affected?  Congress is going to be forced to address these issues over the next four years.  With military costs through the roof, more spending needed to fight terrorism, and a weak economy throughout the U.S. (not to mention numerous other critical issues on the political agenda), Congress and the next president will face major controversy with regards to income tax rates and changes necessary to stimulate the economy and decrease unemployment in the U.S.

The best advice: pay close attention to the expiration of these benefits, make sure that you don’t miss out and consult with your tax advisor.