Tax Planning
After being in session for only two weeks in September, Congress has now adjourned until after the November 6 elections — without reducing any tax law uncertainty. The “lame duck” session is the next possibility for legislative activity. The Senate will return for the week of Nov. 15, break for the week of Thanksgiving and return again on Nov. 29 for a period of time yet to be determined. The House’s schedule likely will be similar.
Congress has a full plate awaiting them in the lame duck session. This includes addressing tax breaks that expired at the end of 2011 as well as the rates and breaks that are scheduled to expire at the end of this year.
The results of the election should shed some light on what Congress will try to accomplish in the lame duck session — and what they’ll punt to next year. (In terms of the latter, tax law changes could be made retroactive.)
According to popular wisdom, the Republican leadership may be more likely to strike an agreement with Democrats on the substance of extending tax cuts if President Obama is re-elected. If Gov. Romney is elected, Republicans would have less reason to compromise.
Other election results that will affect legislative action are which party will control the Senate and by what margin. The Republicans are expected to retain control of the House, but also significant will be how many of the Tea Party members elected two years ago retain their House seats.
As tax law uncertainty continues, year-end tax planning remains a challenge. It’s a good idea to perform a year-to-date review of your income, deductions and potential tax now. That way you can be ready to take quick action once it’s clear what, if any, tax law changes Congress will make before year-end.