On January 3, 2013 the President signed the American Taxpayer Relief Act of 2012. This bill settled many of the "fiscal cliff" tax issues and extended (or made permanent) many tax cuts that were scheduled to expire.

A brief overview of the tax law changes are discussed below:
  • Above-the-Line Deductions:
    • Tuition and fees deduction extended through 2013
    • Educator expenses extended through 2013
  • Itemized Deductions:
    • General state and local sales tax extended through 2013
    • Mortgage insurance premium deduction extended through 2013
  • Alternative Minimum Tax (AMT) exemption amounts were increased as follows for the 2012 tax year (and will permanently be indexed for inflation in following years):
    • Single or Head of Household - $50,600
    • Married Filing Jointly - $78,750
    • Married Filing Separately - $39,375
  • The following were extended for five (5) years (through 2017):
    • American Opportunity Credit for qualifying education expenses
    • Child Tax Credit and the refundable Additional Child Tax Credit
    • Earned Income Credit enhancements
  • 2% cut in Social Security taxes was NOT extended after 2012 (this affects payroll withholding and self-employment taxes)
  • Capital gain and dividend tax rates have been increased starting in 2013
  • Section 179 expense and bonus depreciation deductions extended for 2013 tax year
  • Qualified Charitable Distributions (QCDs) from eligible IRA accounts extended through 2013 (with special rules for distributions made in Dec. 2012 and Jan. 2013)
  • Principle residence debt forgiveness extended through 2013

For details, you may review the American Taxpayer Relief Act of 2012 on the U.S. Government Printing Office website.


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