MDNews - Cleveland-Akron-Canton

American Taxpayer Relief Act of 2012 by martha bethea, Cpa oN our legislators finally passed tax legislation affecting both 2012 and future years. This legislation avoided the expiration of the ���Bush-era tax cuts.��� A summary of the most significant provisions follows. + The individual income tax rates in effect for 2012 continue in future years with the exception of an additional tax bracket of 39.6% for taxable income above $400,000 (single filer) and $450,000 (joint filer). JanUarY 2, 2013, + Long-term capital gains and qualified dividend tax rates remain at 15% but increase to 20% for those with taxable income above $400,000 (single filer) and $450,000 (joint filer). + The 2% reduction to social security tax withheld from an employee���s pay expired at the end of 2012 and was not extended. + At long last, the Alternative Minimum Tax exemption has been permanently fixed. For 2012, the exemption amounts are $50,600 (single filer) and $78,750 (joint filer). These amounts will be indexed for inflation in subsequent years. + Itemized deductions and personal exemptions will once again be subject to phase-out. Those taxpayers with income above $250,000 (single) and $300,000 (joint) will see their itemized deductions and personal exemptions limited. + Items extended at least through 2013 include the marriage penalty relief, adoption credit, enhancements to earned income credit, deduction and credits for tuition and related expenses, child tax credit, exclusion for discharge of qualified principal residence indebtedness, mortgage insurance premiums treated as qualified residence income, and state and local sales tax deductions. + For those over 70�� the provision allowing tax-free distributions 32 | Cleveland/Akron/Canton MD News ��� MDneWS.coM ��� MarcH -april 2013 from an IRA to public charities up to a maximum of $100,000 per taxpayer has been extended. + Estate tax provisions include setting the exemption amount for estate, gift and general skipping transfer at $5 million indexed for inflation. The maximum estate tax rate increased to 40% beginning in 2013. The Act also makes the portability of a spouse���s unused exemption permanent, allowing a married couple to pass at least $10 million in assets free of estate or gift tax. + Businesses also benefit from several provisions of the Act. Bonus depreciation of 50% for property depreciable under MACRS with a recovery period of 20 years or less has been extended through 2013. + Section 179 allows you to fully write off the cost of qualified property in the year of acquisition. This was to be reduced to $25,000 for 2013. The Act increases the maximum expensing amount for 2012 and 2013 to $500,000. The maximum phases out when property acquisitions exceed $2 million. + S Corporations subject to Built-in Gains tax shortens the 10-year recognition period for 2012 and 2013 to five years. After 2013, the 10-year recognition period will return. + Many energy-related credits were also extended, including those for individuals who make energy efficiency improvements to their existing residence. Reviewing these changes with your tax preparer may allow you to minimize the impact of tax increases and maximize the deductions available to you. Martha S. Bethea, CPA, is the managing director in charge of the Medical Practice Management Group of CBIZ/MHM LLC in Akron, Ohio. ���

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