Do the Bush-Era Tax Cuts Affect Your Tax Strategy?

In 2001, President Bush passed a series of tax cuts that mostly affect the tax strategy of the middle and lower classes. The tax cuts were approved as a temporary law, which means that after ten years they would expire. Many Americans held their breath as Congress evaluated whether these tax cuts would be renewed or allowed to expire. At the end of 2010, the tax cuts were approved to be extended until 2017.
What do these tax cuts mean for your tax strategy and what kind of changes in taxing law can you expect if these cuts are allowed to expire?
First, the Bush-era tax cuts changed the child-income tax credit from $500 to $1000 for each child in a home. That means that if you have three children, you are entitled to receive $1000 of government assistance. Even in your income is completely tax deductible, you can still receive the child-income tax credit as a credit on your tax return. If this cut expires, your tax strategy would have to change because you wouldn’t be allowed to claim money that was above and beyond the taxes that you paid during the year.
Also, the cuts created a 10 percent tax bracket where each taxpayer would be mailed a check for all the current year’s savings. The cuts also protected middle-class couples more effectively from the marriage penalty by raising the tax bracket to 15 percent.
It is easy to just continue to enjoy these tax benefits without thinking of how they will affect your tax strategy in the future, but considering your future tax strategy is the best way to ensure that you can make your money work for you. If you are unsure of how these cuts would affect your tax strategy, talk with your tax professional who can provide guidance with all your tax questions.

Karla Dennis

As seen in Forbes Magazine, Karla Dennis is an expert tax and business strategist. As an enrolled agent, Karla is licensed to represent taxpayers in all 50 states. She holds a Masters in Taxation and Business Development and is the author of two books, Tax Storm and Against the Odds.

Karla, CEO of consultancy firm Karla Dennis And Associates, Inc.™, has saved her clients thousands of dollars and has been featured in various media outlets such as Forbes, MSNBC, KTLA, Yahoo! Finance, and SmartMoney, marking her as the ultimate tax expert.

As of 2014, Karla became the new host on the “Mind Your Business” radio show, KTLK AM 1150, sharing her financial and business knowledge with the greater Orange County and Los Angeles areas. As a supporter of women’s rights and issues, Karla is part of the Women Network, an organization built to educate and mentor women. In addition, Karla is the radio host for Women Network Radio, a show that aims to uplift and empower women of all walks of life.