Be prepared for tax changes in 2009

Though various tax and economic relief proposals were introduced in Congress at the end of 2008, most did not pass. Legislators did manage to pass a law authorizing seven more weeks of unemployment benefits for out-of-work individuals (13 more weeks of benefits for individuals in states where the unemployment rate is above 6%).

On December 11, Congress did pass the Worker, Retiree, and Employer Recovery Act of 2008, an emergency pension tax relief bill. The bill suspends for 2009 the requirement that retirees aged 70½ and older must take a minimum annual distribution from their retirement plans. The bill also eases funding requirements for pension plans in an effort to help cash-strapped businesses.

A look at the tax relief provisions that failed to pass in late 2008 will give you an idea of changes that are very likely to occur in 2009 when President-elect Obama takes office. Two provisions likely to pass: an extension through 2009 of 50% bonus depreciation for the purchase of new business equipment and a $250,000 limit on first-year expensing for the purchase of new or used business equipment.

Congress is also set to create a stimulus package in January comprised of middle-class tax cuts and billions of dollars in federal spending on infrastructure over the next two years.

Stay tuned and be sure to check back for what is likely to be a year with multiple changes to the tax code.