There may be a few moves we can make that can help your tax hit before we’re forced into “reaction mode” — which is the only mode out of which after-the-fact tax work can be done. So, if at all possible, I’d like to change that paradigm for you by having you answer a few short questions…

So, without further ado — some questions for you:

Have you had a significant change in your wage income this year?
Have you taken capital gains or losses this year? Are you planning to?
Did you start or sell a business this year?
Did you purchase real estate?
Did you make your full contributions to retirement accounts?
Have you considered a Roth IRA?
Did you withdraw from retirement accounts, and for what purpose?
Are there any other issues you think we should know about?

Now — the answers to these questions form the “tip of the iceberg”, and they will help us to know which direction to take as we work with you.

Why? There is no clear path to answer the question “What are my costs going to be?” What are Congress and the President going to do with regard to the Bush Tax Cuts quickly approaching their sunset expiration dates? Speculation is that there is some behind the scenes negotiating occurring. More and more economists are saying we need at least 2 more years at the current tax rates to climb nudge the economy forward at a faster pace of recovery.

We are also hearing more and more businesses coming out with projected increases in the cost of healthcare based on the federal legislation and mandates handed down to the states. Companies by the dozens are beginning to request exemptions from the requirements of the legislation. Many are contemplating cutting health insurance from their benefits packages, thereby, pushing their employees to the exchanges. Small business makes up a significant majority of employers. Many don’t have the resources to research the 1,000 plus page health care bill to determine what the impact is to them.

Uncertainty impacts consumers as well. They too are “holding” cash. None of us know what our tax rates are going to be come 2011. Many may not know exactly how much their tax bill is going to be until they receive their first pay check in January. If you’re attempting to do a budget for personal cash flow statement for 2011, how do you fill in that blank?

Do you know what your employer is going to do with your employer provided health benefit yet? The cost of company provided employee health insurance is likely going to go up if it hasn’t already. If it has, there is no guarantee it won’t continue to rise as the mandates continue to be implemented and companies begin to understand their true costs associated with this benefit. Companies are likely going to ask employees to at least share in the increased costs. That will reduce your discretionary spending.

Uncertainty impacts both business and consumers. Business aren’t investing in capital projects or hiring new employees to grow. Consumers are holding more of their discretionary funds and not “investing” in the economy. This seems to have created stagnation in the economy. Consumer confidence and spending will truly be tested in a few weeks as Black Friday quickly approaches.

These legislative initiatives created six tax brackets and cut taxes across the board for earned income, long-term capital gains and dividends. They also increased the child tax credit, eliminated the “marriage penalty” as well as many other changes, exemptions and adjustments to the tax code.

How soon could you see the impact if Congress does nothing? You could see it as early as January when your employer starts withholding more taxes from your paycheck. Any taxable income earned in which you are having federal taxes withheld prior to distribution, could be impacted.

Congress could address the tax cuts when they come back to Washington following the mid-term elections. But it is difficult to predict what the political environment will be in the Capital following this highly contested mid-term. It is unlikely that nothing will be done. Democrats and Republicans agree that the expiration of the current tax policy needs to be addressed. The question is whether or not they can come to a consensus on how to address it and for whom.

Most in Congress believe that increasing taxes during a recession will harm our chances for a continued recovery. However, there is still debate on how tax cuts across the board will impact the already stifling $1 trillion plus budget deficit.