Cash Flow Planning for Life - Helping you reach your personal & professional financial goals.

Cash Flow Planning for Life

Helping you reach your personal & professional financial goals.

Common Tax Provisions Set to Expire

This is the first installment of Tax Planning for Changing Times: 5 Things You Should Know which can also be downloaded as a free eBook.

Did you know ten of the most common tax provisions were set to expire at the end of 2012?

1. Current tax rates – The current tax rates of 10%/15%/25%/28%/33%/35% will increase to 15%/28%/31%/36%/39.6% with the 10% rate disappearing.

2. Social Security – The lower 4.2% social security rate (employee only) will revert back to 6.2% as of 1/1/2013.

3. Bonus depreciation and $125,000 section 179 expensing – Beginning the first day of 2013, bonus depreciation expires and section 179 expensing will be reduced to $25,000.

4. $25,000 Education Credit (American Opportunity Tax Credit) – This was set to expire and revert back to the Hope Scholarship credit. Students could take advantage of this credit by paying spring semester tuition by December 31, 2012.

5. Itemized Deductions – There will be a 3% phase out on itemized deductions if your adjusted gross income (AGI) is over $166,800. This phase out was temporally repealed after 2009.

6. Child Tax Credit – The $1,000 child tax credit will be reduced to $500.

7. Beginning 2013, there will no longer be an exclusion from gross income for discharge of indebtedness on a principle residence.

8. Deductibility of mortgage insurance premiums as interest expires in 2013.

9. Deductibility of State and Local sales tax instead of State income tax expires in 2013.

10. There were also many other provisions that were set to expire.

The planning ideas for the end of 2012 are different than in past years due to these changes. If you create or bring income into 2012 from 2013 and delay deductions until 2013, this may potentially lead to tax savings, depending on your level of income.Tax Planning for Changing Times

To learn more about tax planning for changing times, click the eBook on the right and download it for FREE! Take a moment and look at the Tax Facts for 2013 too.

Would you like to know more about the current status of the tax provisions and new tax planning ideas for 2012 and 2013? Contact us online at Makara & Associates, or call (239) 384-9688 in Naples or (239) 768-5008 in Fort Myers. You can also connect, follow, or like us on: LinkedIn, Twitter, and Facebook.

-Mark

This information is based on facts, assumptions and representations as stated and authorities that are subject to change. We will not update this information for subsequent legislative or administrative changes of future judicial interpretations.
LEGAL NOTICE AND DISCLAIMER: The information within this blog is for informational and educational purposes only and is not tax advice and should not be used as such. The facts of each individual situation can have significantly different outcomes when applying tax law. The hiring of a CPA is an important decision not to be based solely on advertisements.

 

 

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