Congress starts voting this week over competing proposals for how to extend the Bush tax cuts.
None of them is likely to be enacted as is -- nor is the debate likely to be resolved before the November elections at the earliest.
But the proposals frame the terms of a fight that will be waging for months.
And at stake are the tax bills of millions of Americans.
Competing proposals: Senate Democrats have proposed to extend all the Bush tax cuts for one year on income up to $200,000 for individuals ($250,000 for married couples).
Democrats would also extend the 2009 expansion of a few tax credits for low-income and middle-income Americans, including the earned income tax credit, the child tax credit and the American Opportunity tax credit.
Q: I lost money when I closed my grandchild's 529 plan. Is this loss tax deductible?
A: Some states establish and maintain qualified tuition programs, also called QTPs or 529 savings plans. The savings plan is intended to be used for paying a student's qualified education expenses at a postsecondary institution.
The beneficiary or student is designated on the account, but the school does not have to be assigned at any time. The contributions are flexible, and the available funds at the time the student enters college may or may not be sufficient to cover all expenses. The savings account is usually invested in conservative assets. As many learned when the market crashed, their investments in these accounts weren't as sound as they were led to believe. Hence, the accounts are sometimes worth less than the contributions.
Retirees who are taking required minimum distributions from their IRAs and 401(k)s well know the importance of making those withdrawals on time. If they miss a distribution, they'll not only owe any taxes that were due on that withdrawal, but they'll also owe a penalty equal to 50% of the amount they should have taken but didn't. Given the size of the penalty, and the fact that many retirees need every bit of income they can get, this isn't something you want to let happen.
Less frequently discussed but also important to keep on your radar is the 6% tax that's levied on what are called "excess contributions" to an IRA--the amount by which an IRA contribution exceeds the maximum allowable amount an individual was able to put in for that tax year.
