AZ to introduce AZ flat income tax exempting 1st $20K

[AZ-Tax]

"Deductions for both personal and corporate filers would be limited to one or two of the taxpayer's choosing, he said, complaining that the tax code is riddled with too many exemptions"

Currently AZ allows qualifying Health Exps that do not qualify under the Feds 7.5% rule to be dedectible in the AZ sch A. I only have 3-4 clients with less then $20K taxable income, usually kids residing with their parents, still I would prefer not to loose them and it sounds like those kids will not need to file a AZ tax return.

http://www.azcentral.com/news/election/azelections/articles/2010/11/07/20101107republican-tax-bill.html

[erchess]

Az I think you will be ok

True, you will lose a few State Returns. But look at what you will gain.

The Federal Income Tax shows no sign of reducing the rate at which its complexity increases. Thus your Fees for those returns should keep going up relative to the cost of living.

The State returns that do have to be filed don't appear to be getting simpler. All the current deductions and credits will continue to be calculated and then the best two will have to be chosen and then subjected to the overall limit. It also would not be surprising if sooner or later the elections made in one year have some impact on the future or if Federal elections come to limit state choices. You may be doing slightly fewer returns but more of them will be complex and therefore expensive.

Then consider the potential mess if congress renews the Bush tax cuts too late for the IRS to reflect this in the Q1 withholding rules that go out in December. Savvy employees will need to file their Forms W-4 differently from usual and then file new ones at some point later in the year. Many will need your help with this and you should charge for that help. Temporary messes seem to me to be fairly frequent and I don't see that changing.