The Tax Help You Need to Finish Your Return Now
With just over a month to go before you need to file your 2012 return, you might find yourself among millions of taxpayers who have started to realize that they'll need more tax help than usual. As the experts behind the exclusive Motley Fool ONE Tax CenterMotley Fool ONE Tax Center have noted, because of complicated end-of-year legislative changes, many of which applied retroactively to the entire 2012 calendar year, it's tougher than ever to figure out which changes you have to make for the return you're working on now, versus what you'll need to worry about next tax season.
To give you the tax help you need, we've put together a list of provisions that got changed for the 2012 tax year and separated them out from the new tax laws applying in 2013. Let's look first at the list of new things you do need now in order to get your returns filed pronto.
What changed in 2012
The biggest change from the fiscal-cliff legislation extended favorable treatment on the alternative minimum tax . Going beyond the usual annual "patch," the new law permanently indexes a higher exemption amount to inflation, saving as many as 30 million people from having to pay AMT.
But a number of other important provisions technically expired at the end of 2011, calling into question whether they'd be renewed for 2012. The compromise reached by lawmakers renewed the following tax breaks retroactively for the 2012 tax year:
- Teachers and other educational professionals can still deduct up to $250 for money they spend on classroom expenses.
- You won't have to include as much as $240 in mass transit or vanpool benefits if your employer provides them for you.
- Mortgage insurance premiums remain deductible as long as you earn less than the phase-out amount.
- The $500 tax credit for home-energy improvements was brought back for 2012 as well.
- If you live in a state where sales taxes are higher than state income taxes, you can still choose to take the sales taxes you pay as an itemized deduction.
- For those who are age 70 1/2 or older and want to make donations to charity from your IRA, you can still do so on a tax-free basis for gifts up to $100,000.
In addition, the higher $500,000 maximum deduction for expensing business property and several lucrative business-related credits were extended retroactively throughout 2012.
For all these provisions, your return should look like business as usual, so you shouldn't need any new tax help beyond what you'd ordinarily get to figure these benefits out.
Looking ahead to 2013
By contrast, a number of changes won't have any impact on your 2012 return but definitely will have a far-reaching impact this year. With implications for your current withholding or estimated quarterly payments to the IRS, you won't want to procrastinate too long getting the tax help you need to deal with them.
Among these changes are most of the best-known provisions of the new law. The return of the 39.6% tax bracket and the new 20% tax rate on dividends and capital gains for high-income taxpayers apply starting in 2013. A new Medicare surtax of 3.8% will also apply above $200,000 in income for single filers and $250,000 for joint filers. In addition, the end of the 2-percentage-point break on payroll taxes ended, so you've probably already seen your paycheck get a little smaller as the government takes a bigger share to cover your contributions to Social Security.
Several old unfavorable provisions were also allowed to come back above certain income limits. Starting in 2013, you'll face the possibility of having your personal exemptions and itemized deductions taken away from you if you earn too much income.
As dire as all this sounds, many taxpayers will see little or no change to their tax returns in 2013. Most of these new provisions apply only to those with relatively high income levels, with the exception of the end of the payroll tax holiday.
After some delays, the IRS has largely gotten itself gathered after the initial disruption from the new tax laws. With these key issues in mind, you should be able to get the tax help you need on the laws that apply to you and get your return filed quickly.
To get even more information on your taxes both for this season and the future, be sure to check out our Motley Fool ONE Tax CenterMotley Fool ONE Tax Center . There, you'll find an extensive report put together by Fool financial expert Robert Brokamp, and it can be yours free. With tax season winding down, this limited-time offer won't last long, so click here right now and claim this valuable tax resource today!
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