How the "Bailout Bill" Affected Taxes

The Emergency Economic Stabilization Act of 2008 (hereafter the bailout bill), originally designed to be strictly limited to eliminate "toxic mortgages" to improve credit markets, ended up with some 290 changes to the tax code. A number of these changes were routine, such as tax extenders for such issues as the AMT patch and deduction for K-12 teacher spending for school supplies; others continued the recent trend of providing tax relief to those affected by natural disasters such as the Midwest floods of early summer and Hurricane Ike. Other provisions include new energy-oriented tax incentives, such as solar electric investments, geothermal heat pumps, energy-saving windows and plug-in cars as well as lowering the floor income for refundability of the child care credit.

With the exception of the AMT patch, my guess is that most of the changes will affect relatively small numbers of taxpayers and primarily those who itemize deductions. Nevertheless, these changes will keep annual tax update instructors busy as demand by CPAs, EAs and attorneys for CE courses on tax updates will continue to be high.