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Saturday, February 12, 2011

INCOME TAX CHANGES: PAYING FOR WINDMILLS AT THE EXPENSE OF THE ELDERLY

By JC Leahy, MA Accounting

Most tax authorities will tell you that the Federal income tax standard deduction amounts remained stable from 2009 to 2010.  This is not really true.  Two important enhancements of the standard deduction have been quietly eliminated for 2010 and beyond.  These eliminations target some of American society's most vulnerable members.  The first is the extra standard deduction for non-itemizers who pay property taxes on their homes.  The second is the extra standard deduction for those who suffer disaster losses.

Many elderly taxpayers who are living on fixed incomes have paid their home mortgages down far enough so that they no longer itemize deductions on their tax returns.  (No having a mortgage payment is the only way some seniors can financially survive.)  Of course, they still have to pay the property taxes on their homes.  Prior to 2010, non-itemizers who paid property taxes on their homes could increase their standard deduction by $1,000.  However, the tax bill passed by the lame-duck Democratic Congress at Christmas, 2010, while providing special tax breaks for putting up windmills, yanked this property tax deduction, effective hiking millions of taxpayers taxable income by $1,000 per couple.  

Similarly, folks who suffered disaster losses prior to 2010 were able to increase their standard deduction by the amount of qualified Federal disaster losses.  That relief also evaporated as of 1/1/2010.

These are two examples of tax increases targeted at some of the most vulnerable members of society at a time when billions were handed out to banks, insurance, and automobile companies, and at at time when Democrats controlled both Congress and the White House.

For further reading, CLICK HERE to check out how Congress rips off taxpayers facing foreclosure.

JC Leahy, MA Accounting
Maximum Legal Refund (TM)
"Taxes Minimized to Your Best Advantage" (TM)
Silver Spring, Maryland
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Tel.: (301)537-5365

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