Wednesday, April 23, 2014
FAIRFIELD-SUISUN, CALIFORNIA
99 CENTS

Expiring credits, deductions extended by Congress

By
From page A6 | January 27, 2013 | 1 Comment

WASHINGTON — Taxpayers preparing to file their 2012 returns can breathe a collective sigh of relief.

The alternative minimum tax or AMT has been patched – permanently – and several tax credits and deductions that technically expired at the end of 2011 were extended as part of the fiscal cliff legislation that Congress passed and President Barack Obama signed into law in January.

“It certainly puts back into place many of the tax benefits that had expired for many people,” said Mark Steber, chief tax officer with Jackson Hewitt Tax Services. “The extenders will be back on people’s tax returns, making their 2012 refunds larger than they would have been.”

But the delay in congressional action could mean confusion for some taxpayers over what credits and deductions still exist.

That could make going it alone on tax day costly. Experts say people should seek some guidance, whether it’s from a professional tax preparer, up-to-date software programs or tax guides, before filing returns.

More than 90 percent of taxpayers go to a tax preparer or use tax software to file their returns, estimated Jim Buttonow, a 20-year IRS veteran who is now vice president of products for New River Innovation, a tax technology company.

___

The Internal Revenue Service will begin accepting returns Jan. 30, an eight-day delay necessitated by the late congressional action.

“We have worked hard to open tax season as soon as possible,” IRS Acting Commissioner Steven T. Miller said in a statement. “This date ensures we have the time we need to update and test our processing systems.”

The agency said most taxpayers – more than 120 million households – would be able to begin filing Jan. 30. But filing for those claiming energy credits, depreciation of property or general business credits will be delayed until late February or March.

Last year, the agency received 137 million returns.

Electronic filing increased by 6.2 percent to 113 million in 2012, an upward trend that tax experts expect to continue. Although most electronically filed returns are by tax professionals, increasing percentages of individuals are doing their own returns electronically.

Nearly 104 million people received refunds last year totaling about $283 billion. The average refund was $2,707, slightly less than the year before, according to the IRS.

___

As people sit down to do their taxes this year, they’ll find that the standard deduction has been adjusted higher for inflation, to $11,900 for married couples filing jointly, $8,700 for heads of households and $5,950 for single taxpayers.

About two-thirds of taxpayers claim the standard deduction, according to Barbara Weltman, an author of J.K. Lasser’s Tax Guide 2013.

Each personal exemption is worth $3,800 this year, up from $3,700 in 2011. Look expansively at dependents beyond your children under 19, or 24 if in college. For example, if you’re paying more than half the support for your parents and their taxable income is less than the $3,800 exemption, you might be able to claim them as dependents even if they’re not living in your own home.

“If a parent’s only income is Social Security, chances are little or none of the Social Security will be taxable. Otherwise, very few people would get to claim a parent,” said Jackie Perlman, principal tax research analyst with H&R Block’s Tax Institute.

Single taxpayers with qualified children or relatives as dependents also may be able to use head of household filing status, which is more advantageous to the taxpayer.

There also are higher mileage rate deductions – 55.5 cents per mile if you use your car for business, 23 cents per mile for moving or medical issues and 14 cents a mile for charity.

Capital gains rates are unchanged from 2011 – a maximum of 15 percent for assets held more than a year.

And don’t forget planning for retirement. You can contribute up to $5,000 to a traditional individual retirement account – $6,000 for people age 50 and older – and reduce their income by that amount. If you haven’t made a contribution yet, there’s still time. You have until April 15, the tax filing deadline.

Be aware, however. Many deductions and credits phase out at higher incomes.

___

Dozens of credits and deductions that affect 2012 taxes had been due to expire at the end of 2011, but were extended as part of the legislation that restored the Bush-era tax cuts for most taxpayers.

The measure breathed new life into deductions for state and local sales taxes and an array of education-related credits and deductions. Not to mention the lack of an AMT patch.

“There was broad bipartisan agreement it had to be fixed,” Steber said.

Originally set up to make sure millionaires were paying taxes, the AMT was ensnaring increasing numbers of middle-class taxpayers. To avoid that, the tax has been adjusted for inflation every year, but the last patch expired at the end of 2011. Without a new one, Miller said in a letter to Congress last fall, about 33 million taxpayers would have to pay the AMT in 2012, up from about 4 million in 2011.

Congress, as part of the fiscal cliff bill, passed a permanent fix for the AMT. Going forward, it will be indexed according to inflation.

For 2012, the AMT exemption is $50,600 for unmarried individuals and $78,750 for joint filers.

“It’s just not that they passed the threshold amount and indexed it for inflation,” said Kathy Pickering, executive director of H&R Block’s Tax institute. “The other nugget in there is that the nonrefundable credits are allowed.”

That means filers subject to the AMT may still be able to use these credits, as long as their income doesn’t exceed the phaseout limits.

The fiscal cliff bill signed by Obama also extends the $1,000 per child tax credit, the expanded earned income tax credit and the credit for adopting a child.

Several education-related credits and deductions also were extended in the legislation.

The American Opportunity Tax Credit can be worth up to $2,500 for college tuition. The credit, which can be claimed for each of the first four years of college, was extended through 2017. Elementary and secondary school teachers will still be able to deduct up to $250 of their out-of-pocket expenses for the classroom.

And taxpayers will have the choice of deducting state and local sales taxes instead of state and local income taxes. This is especially important to residents of states like Florida, which doesn’t have an income tax.

Knowing what tax credits and benefits you’re eligible for is key. No one wants to pay more than is required in taxes.

“You certainly want to understand the tax law,” Steber said. “Look to life changes” like retirement, losing a job, getting married, having a child or an elderly parent moving in as events that can affect your taxes.

___

For people in the Northeast, Superstorm Sandy certainly was a life-changing event. State officials have estimated the total damage at more than $80 billion, most of it in New York, New Jersey and Connecticut.

Tax law allows victims in federally declared disaster areas to file casualty claims in the year the incident happened or file an amended return for the previous year.

If they don’t have all the material they need yet to file 2012 returns, they can amend their 2011 return now to include the casualty losses.

“It’s one of the unique things about those disaster areas,” Pickering said.

That’s just one of the reasons people file amended returns.

Amended returns are often filed when taxpayers discover discrepancies in the income that was reported. Sometimes they receive a 1099 form late or a corrected one after they filed their returns. Or they may discover that they didn’t take a deduction or credit to which they were entitled.

Some people are reluctant to file amended returns out of fear that they might be audited.

Mark Luscombe, principal tax analyst for CCH, said the IRS closely guards statistics on what type of returns invite audits.

“An amended return would not necessarily be an invitation for an audit,” he said.

“It depends what’s contained in there,” said Greg Rosica, a partner at Ernst & Young. “If it’s a very large refund it could get a different level of review.”

___

Online:

Internal Revenue Service: www.irs.gov

The Associated Press

The Associated Press

LEAVE A COMMENT

Discussion | 1 comment

The Daily Republic does not necessarily condone the comments here, nor does it review every post. Read our full policy

  • The MisterJanuary 27, 2013 - 10:01 am

    Oh thank you, great and powerful overlords. May your wisdom and benevolence be praised.

    Reply | Report abusive comment
.

Solano News

 
Delta barriers no longer needed

By Barry Eberling | From Page: A1

 
Supervisors voice concern on state Delta plans

By Barry Eberling | From Page: A1 | Gallery

 
Dental clinic coming Friday, Saturday

By Barry Eberling | From Page: A3, 5 Comments

 
Rotarians talk about running clinic to help Haitians

By Ian Thompson | From Page: A3 | Gallery

 
Fairfield-Suisun Sewer District eyes new auditor

By Ryan McCarthy | From Page: A4

 
County honors Purple Heart recipients

By Barry Eberling | From Page: A6

 
Solano recognizes 1,300-strong volunteer corps

By Barry Eberling | From Page: A6

 
Garamendi to host open house at Fairfield office

By Ryan McCarthy | From Page: A7

 
Highway 12 night work scheduled in Delta

By Barry Eberling | From Page: A7

 
Kids fishing derby in Fairfield is part of Earth Day

By Ryan McCarthy | From Page: A7

 
County approves Icon agreements

By Barry Eberling | From Page: B9

Ceremony set to break ground for Suisun City Walmart

By Amy Maginnis-Honey | From Page: B9, 24 Comments | Gallery

 
Dutch Bros. opening with free drinks

By Barry Eberling | From Page: B9, 11 Comments

 
Museum readies to host Sallie Fox Day in Vacaville

By Amy Maginnis-Honey | From Page: A10, 1 Comment

Golf tournament to raise funds for children

By Barry Eberling | From Page: A10, 1 Comment

 
Mustangs and More event moved back to October

By Ian Thompson | From Page: A10

Rotary club to host clay shooting derby

By Susan Winlow | From Page: A11

 
Ghost Walk returns to Suisun City

By Amy Maginnis-Honey | From Page: A11

Penalty decision looms in Winters homicide case

By Lauren Keene | From Page: A11

 
NAMI talk on reducing mental health stigma

By Barry Eberling | From Page: A11

 
.

US / World

In Internet TV case, justices show concern

By The Associated Press | From Page: A1

 
Michigan affirmative ban is OK, Supreme Court says

By The Associated Press | From Page: A1

GOP candidate releases education policy overview

By The Associated Press | From Page: A12

 
‘Piles and piles’ of bodies in S. Sudan slaughter

By The Associated Press | From Page: A14

FedEx sued over deadly California bus crash

By The Associated Press | From Page: A14, 1 Comment

 
Obama views mudslide scene, mourns with survivors

By The Associated Press | From Page: A14

Analysis: Putin likely to ignore West on Ukraine

By The Associated Press | From Page: A14

 
Biden: Russia must ‘stop talking and start acting’

By The Associated Press | From Page: A14

Most Sherpas decide to leave Everest for season

By The Associated Press | From Page: A14

 
Grieving borrowers told to repay student loan

By The Associated Press | From Page: A14

Jet stowaway at hospital; security issues linger

By The Associated Press | From Page: A14

 
SKorea ferry toll hits 146 as search gets tougher

By The Associated Press | From Page: A14

Ukraine orders new ‘anti-terror’ operation

By The Associated Press | From Page: A14

 
In Ukraine’s east, mayor held hostage by insurgent

By The Associated Press | From Page: A14

Acts of bravery emerge from pilloried ship crew

By The Associated Press | From Page: A14

 
IRS awards bonuses to 1,100 who owe back taxes

By The Associated Press | From Page: A15, 4 Comments

.

Opinion

 
Editorial cartoons for April 23, 2014

By Daily Republic Syndicated Content | From Page: A13

 

Groundwater becomes next big California fight

By Thomas Elias | From Page: A13

 
Fairfield’s main problem is the mayor

By Letter to the Editor | From Page: A13, 7 Comments

.

Living

Solving and resolving life’s problems

By Barton Goldsmith | From Page: A2

 
Today in History for April 23, 2014

By The Associated Press | From Page: A2

Community Calendar: April 23, 2014

By Susan Hiland | From Page: A2

 
 
A healthy take on the very not healthy Scotch egg

By The Associated Press | From Page: B6

Horoscopes for April 23, 2014

By Holiday Mathis | From Page: B7

 
How can I get my 12-year-old grandson to sleep in his own bed?

By Kathy Mitchell and Marcy Sugar | From Page: B7

.

Entertainment

DeGeneres making design series for HGTV

By The Associated Press | From Page: A9

 
Discovery to chronicle Everest avalanche

By The Associated Press | From Page: A9

Bieber seeks delay in Fla. DUI trial

By The Associated Press | From Page: A9

 
Bon Jovi helps open low-income housing in Philly

By The Associated Press | From Page: A9, 1 Comment

TVGrid

By Daily Republic Syndicated Content | From Page: A11

 
.

Sports

5 Fairfield runners finish Boston Marathon

By Daily Republic staff | From Page: B1

 
Sharks beat Kings 4-3 in OT, take 3-0 series lead

By The Associated Press | From Page: B1 | Gallery

Prep swimming update: Postseason looms on horizon

By Paul Farmer | From Page: B1 | Gallery

 
SCC softball ends regular season with 29 straight wins

By Brian Arnold | From Page: B1 | Gallery

Warriors’ Curry eager to erase Game 2 nightmare

By The Associated Press | From Page: B2

 
Spurs’ Popovich wins NBA Coach of the Year

By The Associated Press | From Page: B2 | Gallery

Raiders begin offseason workouts

By The Associated Press | From Page: B2 | Gallery

 
David Moyes out as Manchester United manager

By The Associated Press | From Page: B2

Seahawks acquire QB Terrelle Pryor

By The Associated Press | From Page: B2

 
NFL playoff game to air on ESPN for 1st time

By The Associated Press | From Page: B2

MLB suspends 4 after Brewers-Pirates brawl

By The Associated Press | From Page: B2

 
Djokovic: Wrist better, will try to play in Madrid

By The Associated Press | From Page: B2

Armstrong coach Bruyneel banned for 10 years

By The Associated Press | From Page: B2

 
Pujols’ 500th HR helps Angels beat Nationals 7-2

By The Associated Press | From Page: B2

Rangers rally for two runs in ninth to beat A’s

By The Associated Press | From Page: B2 | Gallery

 
Beverly Hanson, forgotten pioneer in women’s golf

By The Associated Press | From Page: B2

Tech boom presents new wrinkles for Wrigley Field

By The Associated Press | From Page: B2

 
Warriors announce new plans for SF arena

By The Associated Press | From Page: B2

Kentucky freshman Julius Randle to enter NBA draft

By The Associated Press | From Page: B2

 
AP Source: N.Y. Giants’ Hill facing 3rd suspension

By The Associated Press | From Page: B2

NBA Playoffs: Raptors even series with Nets

By The Associated Press | From Page: B3 | Gallery

 
.

Business

Novartis reshapes business with GSK, Lilly deals

By The Associated Press | From Page: B9

 
McDonald’s 1Q profit slips as US sales decline

By The Associated Press | From Page: B9

AT&T had strong 1Q on wireless installment plans

By The Associated Press | From Page: B9

 
Valeant, Ackman make $45.6B Allergan bid

By The Associated Press | From Page: B9

.

Obituaries

Richard P. Horn

By Nancy Green | From Page: A4

 
Kyong Hee Maxwell

By Nancy Green | From Page: A4

Norma O’Regan

By Nancy Green | From Page: A4, 1 Comment

 
Anne Irene Elizabeth Fulgoni

By Nancy Green | From Page: A4, 3 Comments

.

Comics

B.C.

By Daily Republic Syndicated Content | From Page: B6

 
Garfield

By Daily Republic Syndicated Content | From Page: B6

Zits

By Daily Republic Syndicated Content | From Page: B6

 
Peanuts

By Daily Republic Syndicated Content | From Page: B6

Wizard Of Id

By Daily Republic Syndicated Content | From Page: B6

 
Baldo

By Daily Republic Syndicated Content | From Page: B6

For Better or Worse

By Daily Republic Syndicated Content | From Page: B6

 
Dilbert

By Daily Republic Syndicated Content | From Page: B6

Get Fuzzy

By Daily Republic Syndicated Content | From Page: B6

 
Pickles

By Daily Republic Syndicated Content | From Page: B6

Blondie

By Daily Republic Syndicated Content | From Page: B6

 
Beetle Bailey

By Daily Republic Syndicated Content | From Page: B6

Baby Blues

By Daily Republic Syndicated Content | From Page: B6

 
Sally Forth

By Daily Republic Syndicated Content | From Page: B6

Rose is Rose

By Daily Republic Syndicated Content | From Page: B6

 
Frank and Ernest

By Daily Republic Syndicated Content | From Page: B6

Crossword

By Daily Republic Syndicated Content | From Page: B7

 
Word Sleuth

By Daily Republic Syndicated Content | From Page: B7

Bridge

By Daily Republic Syndicated Content | From Page: B7

 
Sudoku

By Daily Republic Syndicated Content | From Page: B7

Cryptoquote

By Daily Republic Syndicated Content | From Page: B7