With the presidential election about a month away, this month's column will compare the tax positions that have been publicly taken by the Presidential candidates, Senator McCain and Senator Obama.

President Bush tax cuts

Senator McCain is in favour of retaining the tax cuts for all taxpayers.

Senator Obama is also in favour of retaining the tax cuts, but only for individual taxpayers with income under $200,000 and married couples with income under $250,000.

15 percent tax rate on qualified dividends and long-term capital gains

Senator McCain is in favour of retaining this tax rate for all taxpayers.

Senator Obama is also in favour of retaining this tax rate, but only for individual taxpayers with income under $200,000 and married couples with income under $250,000.

Individual taxpayers with income over $200,000 and married couples with income over $250,000 would pay a 20 percent tax rate on qualified dividends and long term capital gains.

35 percent top tax rate

Senator McCain is in favour of retaining this tax rate for all taxpayers. Senator McCain is also proposing an optional flat tax of either 15 percent or 25 percent on gross income, with no itemised deductions or personal exemptions.

Senator Obama is in favour of raising the top tax rate to 39.5 percent for individuals with income in excess of $373,000.

Social Security Tax For 2008

Employees will pay a 6.2 percent Social Security Tax on the first $102,000 of their compensation.

Senator McCain is in favour of retaining this tax rate for all taxpayers.

Senator Obama is in favour of retaining this tax rate, but also imposing an additional 6.2 percent Social Security Tax on compensation in excess of $250,000.

Alternative minimum tax

Senator McCain and Senator Obama agree that the alternative minimum taxes should be indexed such that it not affects middle class taxpayers. Senator McCain also proposes adding another five percent exemption until it reaches $143,000 for married couples.

Estate Tax Senator McCain proposes a top tax rate of 15 percent and a $5 million exemption.

Senator Obama proposes a top tax rate of 45 percent and a $3.5 million exemption.

Corporate income tax

Senator McCain proposes reducing the top rate from 35 percent to 30 percent in 2010 and then reducing it 15 a year to 25 percent in 2015.

Senator Obama is in favour of retaining the top rate of 35 percent.

2009 indexed tax changes

The personal exemption will increase to $3,650 in 2009.

The standard deduction will increase to $11,400 for married couples, $8,350 for head of household and $5,700 for individual taxpayers n 2009 The annual gift tax exemption will increase to $13,000 in 2009.

Unlicensed tax preparers

A US Treasury study has indicated that over 60 percent of tax returns prepared by unlicensed tax preparers contained reckless mistakes. There is currently a bill in Congress that will require unlicensed tax preparers to register with the Internal Revenue Service and pass a test before they are allowed to prepare tax returns.

Shareholders in foreign companies

Are you a US citizen and also an officer, director or shareholder in a foreign company? Do you own 10 percent or more of the stock in a foreign company?

Have you been timely filing the annual Information Return of US Persons With Respect To Certain Foreign Corporations? If you have failed to do so, or do so late, staring in 2009, the Internal Revenue Service will subject you to an automatic $10,000 penalty.

Pursuant to the requirements relating to practice before the Internal Revenue Service, any tax advice in this communication is not intended to be used, and cannot be used, for the purpose of (i) avoiding penalties imposed under the United States Internal Revenue Code, or (ii) promoting, marketing or recommending to another person any tax related manner.

The tax advice given by this column is, by necessity, general in nature. You should, of course, check with your own US tax consultant as to how specific transactions affect you since tax advice varies with individual circumstances.

James Paul Sabo, CPA, is the President of ETS Ltd., PO Box HM 1574, Hamilton HM GX, Bermuda. Questions should be sent to: jsabo@expatriatetaxservices.com