For Tax Planning, 2012
Federal income tax provisions affecting individual tax payers that expired on December 31, 2011.
Done Deals
• Individual AMT exemption amounts – Prior law increased the individual AMT exemption amounts for 2011 to $74,450 (MFJ), $37,225 (MFS), and $48,450 (Single/HoH). In 2012 the exemption amounts will decrease to $45,000 (MFJ), $22,500 (MFS), and $33,750 (Single/HoH).
• Tax-free distributions from IRAs for charitable purposes – This provision allowed taxpayers who are at least age 70½ to make tax-free charitable distributions from either a Roth or traditional IRA, of up to $100,000.
• Contributions of capital gain real property made for conservation purposes – Provided for an expanded deduction (50% for individuals, 100% for qualified farmers and ranchers) of the value of a qualified conservation easement donated to a qualifying charitable organization. In 2012 and later, the deduction will be limited to 30% for all taxpayers.
• Deduction for certain expenses of elementary and secondary school teachers – Allowed an above-the-line deduction of up to $250 for unreimbursed classroom expenses.
• Deduction of state and local sales taxes – Through 2011, a taxpayer may choose to deduct, as an itemized deduction on Schedule A, state and local general sales taxes, in lieu of deducting state and local income taxes.
• Qualified tuition and related expenses – This provision allows a taxpayer an above-the-line deduction (up to a maximum of $4,000) for qualified tuition and related expenses for higher education.
Maybe, Maybe Not
• Temporary payroll tax cut – For 2011, the 2010 Tax Relief Act reduced the Social Security (OASDI) payroll tax for employees to 4.2% and for self-employed individuals to 10.4%. In a last-minute Congressional agreement, the Temporary Payroll Tax Cut Continuation Act of 2011 extended the payroll tax cut through February 2012. On March 1, 2012, the payroll tax is slated to return to its previous levels of 6.2% for employees and 12.4% for self-employed individuals.
Given the contentious political environment in Washington, D.C., the ultimate fate of these tax provisions, along with a myriad other issues, remains unclear.
Source: Advisys, IRS press releases, opinion columns in trade publications.
NOTE: Nothing in the above constitutes tax or legal advice. Any financial, tax, or legal action should not be undertaken without the advice of qualified legal and/or tax counsel. Opinions expressed are not necessarily those of Designs In Life Insurance Marketing, LLC or Insurance Designers of America (IDA).
