Taxpayers have a right to be nervous about the impeding “fiscal cliff”. There are a lot of “end of the year” uncertainties because taxpayer don’t necessarily know what to do with their money right now.
For instance: take charitable giving. This year, is it prudent for a taxpayer to make a donation in December or January? One the one hand, if the tax rates are going up, it’s more prudent to wait until January because then you’ll have a deduction next year to offset higher tax margins.
.On the other hand, there is a real possibility that there will be a deductions cap next year, or else possibly the elimination of deductions for charitable giving if the tax code gets overhauled. In that case, it would be better to take the deduction this year in December and not risk losing out on a deduction entirely next year if there are major changes.
Let’s hope we’ll get some decisions by the end of the week. How outrageous is it that people don’t know? It is this very type of uncertainty that we’ve been experiencing for years now, with this administration that has put people, businesses, the market, and the economy on hold.