There are a number of Federal Income Tax laws that had expired on December 31, 2011 or on December 31, 2012 that were resurrected on January 2, 2013 when the President signed the “American Taxpayer Relief Act of 2012”. This is relevant for impending preparation of the 2012 Income Tax Returns.

Here is a brief summary of some of the expired laws that were saved by the American Taxpayer Relief Act of 2012:

For Individuals:

  1. The “above the line” deduction that teachers once got for up to $250 of qualified unreimbursed classroom expenses paid out of their own pockets is revived retroactive to 2012, and forward through 2013.
  2. The “above the line” deduction that parents and students once got for up to $4,000 of qualified tuition and other qualified education costs is revived retroactive to 2012.
  3. The election that taxpayers once had for deducting sales and local tax in lieu of state and local income tax is revived retroactive to 2012, and forward through 2013.
  4. The exclusion from income of cancellation of certain types of mortgage debt of up to $2,000,000 is revived retroactive to 2012.
  5. The ability of taxpayers who are at or over age 70-1/2 to make direct, tax free, charitable contributions from IRA’s to qualified charitable organizations of up to $100,000 is revived retroactive to 2012.

For Businesses:

  1. The research and work opportunity tax credits are revived retroactive to 2012.
  2. The ability to obtain 50% Bonus Depreciation on the purchase of new qualifying equipment used in a trade or business is revived retroactive to 2012.
  3. The short 15-year depreciable life for certain qualified leasehold improvements used in a trade or business is revived retroactive to 2012.
  4. The supercharged Section 179 deduction for qualifying equipment used in a trade or business is revived retroactive to 2012.

 

Conclusion

The retroactive revival of tax benefits is a relief to many taxpayers. Don’t forget these in when you are preparing your 2012 Federal Returns.

 

 

2/2013

Copyright ©, Keith B. Baker – 2013

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