WASHINGTON – A number of tax breaks are set to expire at the end of the year. Some people already are adding up what they could cost you, but don’t spend too much time worrying about them.
“To suggest that the United States Congress just before an election year is going to allow all of these tax breaks to expire is insanity,” says Kevin McCormally, editorial director of Kiplinger’s Personal Finance Magazine.
McCormally has covered taxes for Kiplinger’s for 35 years and says with confidence that members of Congress will pass an extender bill to keep tax breaks alive.
Don’t be too concerned if it doesn’t happen before year’s end.
“They have all of next year to retroactively reenact these tax cuts, and they’ve done that before too.”
Kiplinger’s is predicting it’s more likely current tax breaks will be extended or even increased as opposed to going away entirely. Consider, for example, the 2 percentage point reduction in the Social Security tax. It was enacted as part of the stimulus package and is set to expire Jan. 1, 2012.
But McCormally says not only is there a Congressional proposal to extend that 2 percent cut, there also is a proposal to increase the Social Security tax break to 3.1 percent next year. Another proposal would apply a 3.1 percent tax cut to both employee and employer sides of the wage base.
McComally expects sometime in 2013 or 2014 there will be a major tax overhaul that wipes out a lot of deductions. But he thinks it will happen in conjunction with tax rates coming down. So even then, he predicts most people will not end up paying higher taxes.