Today’s Wall Street Journal had an article titled What the Tax Bill Means for Your Return. Here’s some of the highlights of the new tax bill that should be signed into law later this week:
1. The Alternative Minimum Tax is blocked from increasing for 2006. But, this provision only lasts for 2006. Those who were sucked into the AMT in 2005 won’t get any sort of relief. This isn’t good enough. We need to get rid of the AMT once and for all!
2. Extends the 15% tax rate on dividends and capital gains until 2010.
3. Increases the age limit on the kiddie tax from 14 to 18. Currently under the kiddie tax, the first $800 of a child’s unearned income (investment income) is tax free. The next $800 is taxed at the child’s rate. Anything over $1,600 is typically taxed at the parents’s top rate.
4. Allows wealthy individuals to convert their retirement savings from traditional IRAs to Roth IRAs. It isn’t really clear what this means exactly. In the past there were income limits (modified adjusted gross income of $100,000 or less) that had to be considered before converting a traditional IRA to a Roth IRA. It looks like that number may be done away with. UPDATE: For more on the Roth Conversion, read this article in the San Francisco Chronicle.
For those of you who are interested, you can read Kay’s thoughts on the new tax bill over at Don’t Mess with Taxes.