How the Tax Bill Affects Your Return

Why do today what you can put it off till tomorrow?

That seems to be what our congressional leaders are thinking every time they create a new tax bill. And this latest one is no exception. The $69 billion tax-cut package that already made it through the House and is expected to pass through the Senate by the end of the week basically puts a Band-Aid on a wound that's in desperate need of stitches.

So that means that some tax perks are extended and others get temporary patches to slow -- not stop -- the pain. The best you can do is take advantage of them while they're around, but know that these perks are not forever.

Here are some of the Band-Aids.

Capital Gains and Dividends

Thanks to this new bill, the existing low capital gain and dividend rates will stick around until the end of 2010.

Currently, the long-term capital gains rate is 15% for taxpayers in the 25%-and-higher income tax brackets, and only 5% for those in the 10% and 15% income tax brackets. Those rates were scheduled to jump in 2009 back to 20% for higher-income folks and 10% for the low-bracket taxpayers. But this new legislation will keep the low rates through the end of 2010.

The same goes for the 15% rate on qualified dividends. That rate also was scheduled to disappear at the end of 2008, making dividends subject to your ordinary income tax rate. But the 15% rate also will extend to the end of 2010 with this new bill.

The capital gains rate for folks in the 10% and 15% brackets was scheduled to drop to zero -- that's right, nothing -- in 2008. That perk has now been extended through the end of 2010, says Mark Luscombe, a principal federal tax analyst with CCH, a provider of tax and business law information. That means low-income folks won't pay any long-term capital gains tax in 2008, 2009 and 2010. Yippee for them!