Relief Act of 2012
The first section below is a brief summary of the changes that occured
on 01/01/13, effective retroactively for 2012. Following is another section of tax law
changes that were signed into law the same day that apply to 2013. For tax changes occurring
as a result of the Health Care Act, see the links above this section. Please understand this list is in no way all-inclusive,
so feel free to contact me if wish to discuss a specific change that you
think may apply to you.
-the Alternative Minimum Tax (AMT) has been permanently patched and will be indexed for inflation
annually. Recall this item has been temporarily 'fixed' annually for many years now. Further, numerous credits are allowed
to offset the AMT, in addition to regular tax.
-the above-the-line deduction (up to $250) for out-of-pocket expenses for teachers and other educators
remains in place through 2013.
deduction for qualified mortgage insurance premiums for taxpayers with AGI no more than $109,000 remains for premiums paid
energy property credit, limited to $500 (lifetime), stays through 2013. This credit is for qualified energy
efficiency improvements and expenditures to your principle residence.
-the option to deduct state and local general sales
taxes in lieu of state and local income taxes also remains in place through 2013.
-the above-the-line deduction for tuition and fees for qualified higher education expenses is extended through 2013.
-qualified charitable distributions from an IRA will
remain in place through 2013. This law allows taxpayers over 70½ to make these tax-free transfers and
have them count towards their required minimum distribution.
-numerous extensions and increases in depreciation options for qualified leasehold property and section 179 deductions.
-many business credits and deductions were extended
through 2013 that were set to expire at the end of 2011.
-tax rates are now 10/15/25/28/33/35/39.6%. The top rate is for individuals earning
more than $400K, joint filers earning more than $450K and head of household filers earning more than $425K.
-the 15% maximum rate on long-term capital gains
and qualified dividends is permanent to the extent listed above and indexed for inflation after 2013. Income in excess of
the above will result in long-term capital gains and qualified dividends being taxed at 20%,
to the extent the gains and dividends exceed the threshold amount. Those taxpayers in the 10% and 15% brackets will continue to enjoy a 0% tax on these gains and dividends.
-individuals will be able to continue to exclude up
to $2 million of cancellation of debt income from qualified indebtedness that is cancelled through
the end of 2013.
deductions and exemption allowances are phased out and reduced (respectfully) when adjusted gross income exceeds
$250K for individuals, $275K for head of household & $300K for married taxpayers. These amounts
will be indexed for inflation after 2013.
-numerous child related (adoption, dependent care, earned income, & child tax)
credit changes are now in place effective 01/01/13. Absent this new law, many of these would
not been as beneficial as they are now.
-the American Opportunity Credit has been extended for five years and other educational benefits
improved upon that were scheduled to revert back to earlier, less generous amounts and rules.
Also, the student loan interest deduction rules have been improved.
-beneficial credits and changes to depreciation
are changes that have been made to laws that cover business.
-improvements to estate and gift tax exclusion amounts and gift tax rates, as well as an extension
to the transfer of spouses unused exclusion amount. Further, the income tax rates for estates and trusts
have been modified.