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Software Tax (AXcess News) Washington - The US House of Representatives passed a bill providing tax cuts worth $70 billion over five years by a 244-185 vote. Now the Senate is expected to approve the tax legislation for President Bush's signature.

As the calendar year quickly approaches its end, Congress is rushing to finish its work on a number of tax bills under consideration. The House of Representatives overwhelmingly passed three tax bills on December 7, -the Stealth Tax Relief of 2005, the Gulf Opportunity Zone Act of 2005 and the Tax Revision Act of 2005. The next day, 197. The latter is a $56.5 billion measure that must now go to conference with the Senate, which passed a different version of the legislation, the Tax Relief Act on November 17.

Every Landlord Tax Deduction The bill provides for tax relief for an estimated 15 million Americans who would otherwise face the alternative minimum tax. It provides a two-year extension of the reduced 15 percent tax rate for capital gains and dividends, currently set to expire at the end of 2008.

The House of Representatives has passed an alternative minimum tax relief bill, temporarily curtailing a tax increase that was never supposed to be levied and permanently instituting a new tax to replace it. But the measure likely will never become law, leaving the Senate to start over and draft a bipartisan compromise, with only weeks until tax filing season begins. For further details, please read Year AMT Patch Legislation.

Tax Help The tax cuts enacted by the Bush administration have deeply divided lawmakers with the GOP saying it boosted the economy while Dems say that the deficit-financed tax cuts only favored the wealthy and that the economic benefits have not been as great as promoted by the Bush administration.

Congress Moves To Make Some Tax Cuts Permanent The House of Representatives on April 28, 2004, passed a bill to make permanent the marriage penalty relief measures contained in a 2001 tax cut law, 95 vote. The measure now goes to the Senate. The bill would permanently increase the standard deduction percent tax bracket for married persons filing jointly to twice that of single taxpayers. In addition, the bill would permanently extend the earned income credit (EIC) phaseout for lower income taxpayers to factor in marriage penalty relief. Under the original 2001 tax cut package, the EIC increases by $2, 2007 and by $3, 000 in following tax years up to 2010.

Help Tax According to the Center for Budget and Policy Priorities, nearly half of the benefits from the $70 billion capital gains and dividend tax cut extensions would go to households earning more than $1 million a year. Middle-income households would get an average tax cut of just $20 from the agreement, according to preliminary estimates by the Urban Institute-Brookings Institution Tax Policy Center, while the 0.2 percent of households with incomes over $1 million would get average tax cuts of $42,000, and the top 0.1 percent of households (whose incomes exceed $1.6 million) would get average tax cuts of $82,000.

With both sides entrenched heading into an election cycle, a compromise may be in the offing, allowing both sides to declare victory and move on. On July 29, 2006, the House took a step in that direction by passing legislation to raise the minimum wage coupled to provisions to extend several tax measures, including one lowering the estate tax. The wage hike proposal could endanger the the tax reform efforts when the Senate takes up the bill, which is likely sometime during the week of July 31, as the Senate has never garnered more than 47 out of 100 votes for changing the minimum wage.

Ernst Ernst Guide Guide Tax Dems objected to cuts in the legislation that otherwise gave school teachers deductions for supplies they bought out of their own pocket for the class room and state and local sales tax will not be permitted to be deducted. In addition, employers will not receive a tax credit for hiring people on Welfare this year and families paying college tuition will not be able to deduct that tuition from their taxes this year.

Tax Return House Speaker Dennis Hastert (R-IL) said the tax bill"extends key provisions of tax relief that have boosted the US economy. "Our tax relief sparked this economic growth," said Hastert.

Return Tax In a statement, President Bush said pro-growth policies have helped the economy create more than 5.2 million jobs since August of 2003. "By extending key capital gains and dividends tax relief, the House has taken an important step to continue to help hardworking Americans and to keep our economy strong and growing."

Guide Guide Master Master Tax But according to Rep. Jim McDermott (D-Wash.), it's the nations wealthy that are benefiting most. "The Republican Party is sending all the millionaires on an all-expenses-paid vacation for $41,000 a year," said McDermott. "The rest of America is being forced to choose between filling the gas tank or stocking the refrigerator."

Tax Preparation Rep. Richard Neal (D-Mass.) said, "This bill cuts taxes for Wall Street at the expense of Main Street."

Preparation Tax Because the tax legislation is not over $70 billion, Democrats will be unable to filibuster the bill, paving the way for the GOP to use the tax breaks for election advantages.

Employer Tax Guide Another bill, which contains up to $30 billion in tax breaks backed by both Republicans and Democrats, will advance later to a vote, but for now, by dividing the tax breaks into two separate bills it's sure to clear President Bush's signature.

Tax Services The $30 billion tax bill widely supported by both Parties includes preserving tax deductions for state and local sales taxes, a tuition tax deduction, a tax break for teachers who buy their own school supplies and a research and development tax credit for businesses.

Services Tax A big objection to Wednesday's tax legislation is giving the wealthy the right to transfer funds to Roth IRAs without being taxed. Under current rules, Roth transfers would create an immediate income tax.

Master Tax Guide Opponents say the Roth plan would help the Treasury now but shortchange the government in future years because money saved in a Roth IRA grows tax free.

Tax Attorney The bill also would extend for two years provisions sought by small businesses to let them write off up to $100,000 in investments in equipment.

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