Tuesday, May 8, 2012

Federal Tax Provisions Not Applicable for 2012 Tax Returns

As we move towards the 2013 Filing Season you will need to keep an eye out on what Congress does with regard to the “Extender” tax provisions that expired at the end of 2011.
Here are two lists of the provisions that will have the most impact on individual Tax Year 2012 Federal returns.

Provisions that are no longer applicable for Tax Year 2012 Federal returns:
  • $250 Educator Expense Deduction – Form 1040, line 23
  • Tuition and Fees Deduction – Form 8917
  • Itemized Deduction for Sales Tax
  • All personal nonrefundable tax credits allowed when calculating Alternative Minimum Tax
  • Residential energy credits on Form 5695
  • 5 year depreciation for farming business machinery and equipment
  • 15 year straight line depreciation allowed for qualified leasehold restraint and retail improvements
  • Tax-free distributions from IRAs for charitable purposes
  • Contributions of capital gain real property made for conservation purposes (50% limitation applied instead of 30% limitation)
Provisions that changed significantly for Tax Year 2012 returns:
  • Alternative Minimum Tax (AMT) exemption amounts revert to what they were for Tax Year 2000
    Tax Year 2012 AMT exemption amount is:
    • Single/Head of Household: $33,750
    • Married Filing Joint: $45,000
    • Married Filing Separate: $22,500
  • Maximum Section 179 Deduction amount has been reduced to $139,000 for Tax Year 2012
  • Bonus Depreciation percentage is reduced to 50% for Tax Year 2012
  • Adoption Credit
    • Will revert to being a nonrefundable credit with any excess allowed to be carried forward for 5 years
    • Maximum credit is reduced to $12,170 per child
As in the past there is the possibility that Congress will extend some or all of these provisions sometime before the end of 2012 (most likely in the November/December timeframe). Check back for more information as to what action Congress takes on these provisions later this year and what impact these late legislative changes will have on the start of the 2013 Filing Season.

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