After finishing my first article on the American Tax Relief Act of 2012 (see the Jan. 10 issue of the Town Crier) I realized that there were several important provisions that I still needed to discuss.
Cancellation of indebtedness income is taxable unless an exclusion applies. The principal residence exclusion for up to $2 million of acquisition debt is extended through 2013.
The mortgage insurance premium deduction, which expired at the end of 2011, has been extended through 2012 and 2013.
The adjustment ($250 or less) for teachers who have out-of-pocket expenses for classroom materials has been extended through 2013.
The provision that allows taxpayers 70 1⁄2 years and older to make tax free distributions directly to a charity of choice has been extended through 2013 (up to $100,000).
ATRA extends through 2013 the higher limits for Sec 179 expensing of depreciable assets for businesses. Likewise, the 50 percent bonus depreciation has been extended through 2013.
It is still possible to deduct local and state sales taxes in lieu of state income tax through 2013.
The Bush-era enhancements to the child and dependent care credit have been made permanent. The maximum credit rate of 35 percent on up to $3,000 of expense for one child and $6,000 for two children is reduced, based on adjusted gross income.
The generous American Opportunity Tax Credit for higher education is extended through 2017. Tuition, fees and books are qualified expenses for the credit.
The deduction for tuition and related expenses is extended through 2013.
The energy credits for individuals making energy efficiency improvements to their homes have been extended through 2013. The lifetime credit limit is $500 ($200 for windows and sky lights).
There are even more provisions which space does not allow us to discuss. Your tax preparer should be able to discuss with you those affecting your return.