The 2012 Taxpayer
Relief Act prevents many of the tax hikes that were scheduled to go into effect
this year and kept many favorable breaks that were scheduled to expire.
The major individual
tax breaks include:
permanent the Bush-era income tax breaks for families under $450,000 and single
filers under $400,000. This eliminated
the scheduled tax increase for all but the highest income earners.
Alternative Minimum Tax exemption increases for 2012 by $2,050 for married couples
and $1,300 for singles. The exemption is
permanent and will automatically increase each year based on the rate of inflation.
deduction for educator expenses reinstated for 2012 and extended for 2013.
exclusion from income for discharged home mortgage debt is extended for
2013. Without this extension, taxpayers may
have had to include gain on the discharge debt as income when their personal
home was repossessed or short sold.
deduction of mortgage insurance premiums is reinstated for 2012 and extended
deduction for college expenses is reinstated for 2012 and extended for 2013.
IRA transfers to eligible charities are reinstated for 2012 and extended for
American Opportunity College Tax Credit that was slated to expire after 2012
was extended for five years.
of state income taxes and sales tax are reinstated for 2012 and extended for
tax credits reinstated for 2012 and extended for 2013.
In future blogs we
will explore tax-planning opportunities that you can take advantage of now that
Congress has finally let us know what the rules are for 2013.
Until then, let-s make
this our most profitable year ever.
Like any good CPA, I need to add a disclaimer: Unfortunately, it is impossible to offer comprehensive tax info over the Internet, no matter how well-researched or written. And remember, I love my readers, but having me bookmarked on your computer doesn’t make you a client: Before relying on any information given on this site, contact a tax professional to discuss your particular situation.