We have a new tax law. What does it mean to you?
First and most importantly, very little happens quickly. Most of the changes are phased in very slowly. For
some reason, politicians like to do it this way: small cuts today, scheduled to grow in future years (when
the present administration will not be around to deal with things), unless they change the law again.
The strangest thing about the new law is that it self-destructs on January 1, 2013. Everything it does
reverts to the old law at that time.
This is a brief overview of the new tax legislation and some perspective on how it could affect your personal
and business tax planning. Our current focus is on provisions going into effect immediately or in 2002. It is
vital to remember that many of the provisions are not slated to become fully effective for several years.
Further, everything in this new law expires in 2013, unless extended or changed again by whatever
Congress we may have in the next 10 years, or 2 weeks.
I have to repeat myself: We don't get most of the goodies for several years; then, EVERYTHING in this
new law goes away in 2011 and it goes back to today's law.
The "Economic Growth and Tax Relief Reconciliation Act of 2001," provides income tax changes, retirement plan changes, death tax changes.
"Sunset" in 2013? One final aspect of the legislation merits comment. Technically, the changes made by the new law, including the "death tax repeal," will cease to apply after 2012! This highly unusual provision was included to insure technical compliance with the federal budget law. The lawmakers obviously assume that this provision will be eliminated in future legislation.
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