- Days left

Tax revenues continue to plummet: Is it time to panic?

Two months ago, the predictions were dire. The Treasury Department calculated that at the then-current pace, tax receipts for 2009 would be almost 20% less than last year. The drop in tax revenues was thought to be the steepest decline since 1932 during the Great Depression.

Data out this week, however, is even worse. Collections through the end of August are down 25%. Those numbers include collection rates for individual taxes, corporate taxes, Social Security and Medicare revenues and other payroll taxes. Corporate income tax revenues alone plunged nearly 60%.

There may, however, be some good news: with the economy looking as if it may rebound (soon, we hope), revenue estimates for next year are already a bit more rosy. One wonders, however, if that's not just wishful thinking. There are a number of bills currently in Congress targeted at lowering taxes and extending existing breaks. Trickle down theories aside, the result of those bills is that tax revenues are likely not going to increase significantly next year.

Which tax breaks may make the cut? Lawmakers are considering provisions, among others, which would extend the first time homebuyer's credit; permanently eliminate the federal estate tax; provide further AMT relief; broaden corporate tax cuts; and expand the level of exempted income for the unemployed. New tax breaks for the working class and a second round of Cash for Clunkers have also been mentioned as possibilities.

If tax cuts or expansions of existing credits are indeed in the picture for 2010, should we be worried? Most economists and tax professionals, surprisingly, say no. While the picture for 2009 was darker than expected, the forecast for 2010 wasn't much better to begin with. In other words, it's the blessing of low expectations.

Increase your money and finance knowledge from home

Timing Your Spending

How to pay less by changing when you purchase.

View Course »

Advice for Recent College Grads

Prepare yourself for the "real world".

View Course »

TurboTax Articles

How Does IRS Form 1095-B Affect Small Businesses?

IRS Form 1095-B provides information about health insurance coverage. The Affordable Care Act (ACA), also known as Obamacare, requires that insurance providers send this form to those whose coverage meets the minimal standards of the law.

Tax Tips for Job Hunters

It's been said by many that looking for a job is a job in itself. The Internal Revenue Service (IRS) allows the deduction related to some costs of job hunting, the same way employees can deduct some unreimbursed job expenses. Not all job searches qualify, though, so it's wise to educate yourself on the rules.

What is Form 1095-C: Employer-Provided Health Insurance Offer and Coverage

The Affordable Care Act, or Obamacare, requires certain employers to offer health insurance coverage to full-time employees and their dependents. Further, those employers must send an annual statement to all employees eligible for coverage describing the insurance available to them. The Internal Revenue Service (IRS) created Form 1095-C to serve as that statement.

What is Form 1098-E: Student Loan Interest Statement?

If you paid interest on a qualified student loan, you may be able to deduct some or even all of that interest on your federal income tax return. Student loan companies use IRS Form 1098-E to report how much you paid in interest. Borrowers get a copy of this form, and so does the IRS.

Add a Comment

*0 / 3000 Character Maximum