Moments before stealing away from Washington under the cover of darkness for the Memorial Day recess, our beloved Congress passed yet another major new tax law (the fourth one in the last 13 months). This latest effort is called the Small Business and Work Opportunity Tax Act of 2007 (the Act). President Bush signed it into law on 5/25/07. The stated purpose of the legislation was to provide small business owners with tax relief to help offset the cost of the newly increased federal minimum wage. However, the Act also includes “revenue raisers” (better known as tax increases) to pay for the tax relief. If this makes sense to you, consider running for Congress yourself. Anyway, below is a link to a site that summarizes the provisions in the new law. We will cover the biggest piece of bad news first.
Unfavorable New Kiddie Tax Rules
If it seems like it was just a short while ago that Congress made anti-taxpayer changes to the Kiddie Tax rules, you’re right! Last year’s Tax Increase Prevention and Reconciliation Act (TIPRA) included unfavorable new rules that were retroactive to 1/1/06 for affected calendar-year individuals. Ouch!
Now Congress has gone and done it again. This time, however, the new anti-taxpayer rules won’t take effect until tax years beginning after 5/25/07, which means starting with 2008 for calendar-year individuals.
Here’s the gist: for 2008 and beyond, the Kiddie Tax can potentially come into play until the year during which a child turns 24. This used to be age 14 and was one of our keys to planning for post highschool education. It finally cuts out for that year and for all subsequent years. In other words, the term “Kiddie Tax” will soon become a complete misnomer.
Here is the link to all of the new tax changes.
http://www.quickfinder.com/intranetfiles/135199/smallbizact.pdf
Unfavorable New Kiddie Tax Rules
If it seems like it was just a short while ago that Congress made anti-taxpayer changes to the Kiddie Tax rules, you’re right! Last year’s Tax Increase Prevention and Reconciliation Act (TIPRA) included unfavorable new rules that were retroactive to 1/1/06 for affected calendar-year individuals. Ouch!
Now Congress has gone and done it again. This time, however, the new anti-taxpayer rules won’t take effect until tax years beginning after 5/25/07, which means starting with 2008 for calendar-year individuals.
Here’s the gist: for 2008 and beyond, the Kiddie Tax can potentially come into play until the year during which a child turns 24. This used to be age 14 and was one of our keys to planning for post highschool education. It finally cuts out for that year and for all subsequent years. In other words, the term “Kiddie Tax” will soon become a complete misnomer.
Here is the link to all of the new tax changes.
http://www.quickfinder.com/intranetfiles/135199/smallbizact.pdf
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