Today’s topic is a brief listing of various tax issues that Congress needs to address in the near future. These are issues that may be affected by the election.
Before we go to that list, have you voted yet?
Here are some of the items scheduled to expire at the end of 2012:
The Bush era tax cuts will expire. This will cause an increase in all tax brackets and the elimination of the 10% bracket. It will also increase the long term capital gain rate to 20% and eliminate the 15% rate for qualified dividends.
The lower 4.2% rate for employees’ portion of the Social Security payroll tax expires.
50% bonus depreciation expires.
Section 179 expensing decreases from $125,000 to $25,000.
Estate and Gift Tax Exemption decreases from $5.12 million to $1 million and top rate will increase to 55%.
Marriage penalty relief which provides for an increased size of the 15% bracket and increased standard deduction expires.
The $1,000 Child Tax Credit will revert to $500.
American Opportunity Education Tax Credit expires.
Exclusion from gross income for discharge of indebtedness on a principal residence expires.
There is also a large list of items which expired at the end of 2011 which have historically been extended on a year by year basis. The largest of these is the increased AMT exemption. This will cause many more individuals to be subject to the alternative minimum tax for 2012.
In addition to these tax issues, Congress will need to address the fiscal cliff issue to prevent a large automatic cut in government spending in 2013.
Will Congress be able to address all of these areas before the end of 2012? The 2012 presidential and congressional elections will greatly impact the outcome of these tax and spending issues.
As I started this blog – have you voted yet?
Disclaimer: The items included in the Tax Tip Tuesday Video Blog are informational only and are not meant as tax advice. Consult with your tax advisor to determine how any item applies to your situation. IRS Circular 230 disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advise contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.