American Taxpayer Relief Act of 2012: Income Tax Provisions

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  • Free initial consultation, Credit cards accepted, Fixed hourly rates

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Serving Columbus, OH

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On January 1, 2013,
Congress passed the American Taxpayer Relief Act of 2012, which President Obama
recently signed into law.  The Act
extends a number of Bush-era income tax provisions and reinstates a number of
Clinton-era income tax provisions with certain modifications. Significant items
include:

  • Permanent extension of the 10
    percent, 15 percent, 25 percent, 28 percent, 33 percent and 35 percent
    individual income tax rates.
  • Beginning in 2013, reinstatement
    of the 39.6 percent individual income tax rate for taxable income of more
    than $450,000 for married filing jointly filers (more than $225,000 for
    married filing single taxpayers), more than $425,000 for head of household
    filers or more than $400,000 for single filers.
  • Beginning in 2013, the rate for
    certain long-term capital gains and qualifying dividends for taxpayers in
    the new 39.6 percent income tax bracket is increased to 20 percent, not
    including the new 3.8 percent Medicare tax on net investment income.
    Furthermore, there is a permanent extension of the favorable current
    capital gain rates (e.g., 0 percent/15 percent) for certain long-term
    capital gains and qualifying dividends for all taxpayers except those
    whose taxable income puts them in the new 39.6 percent income tax bracket.
  • Beginning in 2013, reinstatement
    of the personal exemption phase-out (PEP) for taxpayers with adjusted
    gross income of more than $300,000 for married filing jointly filers (more
    than $150,000 for married filing single filers), more than $275,000 for
    head of household filers and more than $250,000 for single filers.
  • Beginning in 2013, reinstatement
    of the repeal of the phase-out of up to 80 percent of itemized deductions
    for taxpayers with adjusted gross income of more than $300,000 for married
    filing jointly filers (more than $150,000 for married filing single
    filers), more than $275,000 for head of household filers and more than
    $250,000 for single filers.
  • Permanent extension of the
    "marriage penalty" relief standard deduction, the 15 percent
    rate bracket for married filers and the earned income tax credit
    provisions.
  • Permanent extension of the $1,000
    child tax credit and a five-year extension (through 2017) of the 2009
    modification that provided that earnings above $3,000 would count toward
    refundability.
  • Permanent expansion of the
    student loan interest deduction and the dependent care credit.
  • Permanent extension of the
    adoption credit and the employer-provided child care tax credit.
  • Permanent patch of the
    alternative minimum tax (AMT) by (i) increasing the exemption amounts for
    2012 to $50,600 for single filers and $78,750 for married filing jointly
    filers, (ii) indexing the exemption and phase-out amounts for inflation
    and (iii) allowing nonrefundable personal credits against the AMT.
  • Five-year extension of the
    "third-child" earned income tax credit rules included in the
    American Recovery and Reinvestment Act of 2009 (ARRA) (through 2017).
  • Two-year extension of the
    deduction for certain expenses of elementary and secondary school teachers
    (through 2013).
  • Two-year extension of the
    election to deduct state and local sales tax in lieu of state and local
    income taxes (through 2013).
  • Two-year extension of the special
    rule regarding contributions of capital gain real property by individuals
    for conservation purposes and the exclusion from gross income for
    distributions from an IRA that are "qualified charitable
    distributions" (through 2013).
  • Two-year extension of the
    qualified tuition deduction (through 2013).
  • Two-year extension of the
    deduction for mortgage insurance premiums (through 2013) and a one-year
    extension of the mortgage debt relief provisions (through 2013).
  • Two-year extension of the
    increase in the monthly exclusion for employer-provided van pool and
    transit pass benefits (through 2013).
  • Beginning in 2013, the employee
    Social Security tax rate will revert to 6.2 percent (from the stimulus
    level of 4.2 percent) for wages up to $113,700.

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Learn about the Income Tax Provisions of the American Taxpayer Relief Act of 2012.

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