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Recent Posts:All Good Things Must Come to an End. Or Do They?For a majority of taxpayers, such as yourself, the good things are certain tax deductions and credits you have grown accustomed to claiming on your tax returns. The end is the fact that these tax provisions and laws expired on December 31, 2011. What do the expiring tax laws mean you for? Since you may lose certain tax deductions and credits, the expiring laws are essentially equal to a tax increase, barring any other reduction in tax rates or offsetting deductions/credits. However, in past years, the government has extended these tax deductions and credits at the last moments. Let’s take a look at the major, expired tax deductions and credits: Expired Individual Tax Provisions · AMT patch o Prevented the Alternative Minimum Tax from hitting millions of taxpayers · Educator expenses deduction o Allowed a $250 deduction for certain teacher’s supplies · Expansion of adoption credit o Allowed the adoption credit to be refundable · Mortgage insurance premium deduction o Allowed a deduction for mortgage insurance premiums · Nonbusiness energy property credit o Allowed a tax credit for purchase of certain energy efficient property · Qualified tuition and fees deduction o Allowed a deduction up to $4,000 of higher education tuition expenses · Sales tax deduction o Allowed a deduction for general and local sales tax paid by a taxpayer Expired Business Tax Provisions · 100% bonus depreciation provision o Allowed businesses to currently expense certain asset purchases · $500,000/$2,000,000 Section 179 expensing o Allowed businesses to currently expense certain asset purchases , subject to limitations · Section 179 depreciation and/or 15 year straight line depreciation for qualified leasehold improvements, qualified restaurant improvements, and qualified retail improvements o Allowed businesses to currently deduct the above qualified improvements and/or use 15 years straight line depreciation instead of 39 years depreciation · Research and development tax credit o Allowed a tax credit for certain R & E expenses · Work opportunity credit o Allowed a tax credit for businesses who hire targeted individuals (extended for qualified veterans) Will the government extend these provisions as they’ve done in the past? It is difficult to predict, especially given the economic and political climate ahead. I’ll keep you updated on these expiring provisions during the year. For more information on the effect of these expiring tax policies, and the expiration of the Bush tax cuts and Payroll Tax Cuts after 2012, read the CRS report “An Overview of Tax Provisions Expiring in 2012.” Josh Goodis, CPA, MTAX | 05/03/2012
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Josh's Tax Tips
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