With New Law, Tax Compliance Will Be Even More Confusing
June 1, 2001
Don't expect the new tax law to simplify next year's filing, tax professionals warn. Even they are confused by some of its provisions and expect that taxpayers will find things even more complicated next year.
Here are a few examples -- and provisions to watch out for:
- Because the estate tax will be gradually eased through 2009, repealed in 2010 and reinstated in 2011, tax experts say that drafting wills and other documents that will work in all possible scenarios will be a huge challenge.
- The alternative minimum tax -- which now affects about one million filers -- would have hit 17.5 million taxpayers by 2010 even under current law, but will now impact 35.5 million that same year, thanks to the 2001 changes.
- Because Congress didn't have the money to pay for all the things it wanted over the 10-year life of the law, it initiated tax breaks that appear over time and then suddenly disappear -- guaranteeing chaos prior to each April 15.
- And then there's that $300 to $600 rebate to be sent to individuals and couples this year -- which will have to be figured into 2001 tax returns next spring, since it is considered a rebate on 2001 taxes.
As if that weren't enough, tax specialists expect that Congress will be watching closely to see how taxpayers respond to the changes. If they don't like the responses, expect more tinkering in the years ahead.
Source: John D. McKinnon, "For Taxpayers, Life Just Got Much More Complex," Wall Street Journal, June 1, 2001.
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