» Tax Legislation

President Signs Fiscal Cliff Legislation

CCH — Thu, 03 Jan 2013 18:07:36 +0000

(January 2, 2013) Following Congressional passage on January 1, 2013, the President signed the American Taxpayer Relief Act of 2012 (H.R. 8 ) on January 2, 2013. January 2, 2013 therefore becomes the enactment date for the legislation, although almost all of the provisions have a retroactive effective date to either January 1, 2012 or January 1, 2013. The act permanently extends the tax cuts from the 2001 and 2003 tax acts with a few exceptions. A 39.6 percent tax rate would apply to single filers with incomes over $400,000 ($450,000 for joint filers). The phase-out of itemized deductions and exemptions would also return for single filers with incomes over $250,000 ($300,000 for joint filers). The estate tax exemption amount would be retained at an inflation adjusted $5,000,000 but the maximum tax rate is increased to 40 percent. The top capital gains rate would also be increased to 20 percent for higher income taxpayers. The bill would also permanently extend alternative minimum tax relief with inflation adjustments to the exemption amount.

Five-year extensions are included for the American Opportunity Tax Credit and certain parts of the Child Tax Credit and the Earned Income Tax Credit. Most of the provisions that had expired at the end of 2011 were extended for two years; however, a number of the expired provisions were not included in the extension. The more popular individual and business regularly expiring provisions were extended, and several extended provisions also included modifications. Bonus depreciation and small business expensing of capital acquisitions were included in the extensions.

A number of non-tax issues were also addressed in the legislation, including unemployment, health, agriculture and sequestration issues. The payroll tax reduction that had been in place for the last couple of years was not included.

Congress Passes Fiscal Cliff Legislation

CCH — Wed, 02 Jan 2013 12:21:08 +0000

(January 1, 2013) Following Senate passage the previous night, the House on January 1, 2013, passed the American Taxpayer Relief Act of 2012 (H.R. 8) by a vote of 257 to 167. The act permanently extends the tax cuts from the 2001 and 2003 tax acts with a few exceptions A 39.6 percent tax rate would apply to single filers with incomes over $400,000 ($450,000 for joint filers). The phase-out of itemized deductions would also return for single filers with incomes over $250,000 ($300,000 for joint filers). The estate tax exemption amount would be retained at an inflation adjusted $5,000,000 but the maximum tax rate is increased to 40 percent. The top capital gains rate would also be increased to 20 percent for higher income taxpayers. The bill would also permanently extend alternative minimum tax relief with inflation adjustments to the exemption amount.

Five-year extensions are included for the American Opportunity Tax Credit, the Child Tax Credit, and the Earned Income Tax Credit. Most of the provisions that had expired at the end of 2011 were extended for two years; however, a number of the expired provisions were not included in the extension. The more popular individual and business regularly expiring provisions were extended, and several extended provisions also included modifications. Bonus depreciation and small business expensing of capital acquisitions were included in the extensions.

The legislation now moves to President Obama for his expected signature.

Senate Passes Fiscal Cliff Legislation

CCH — Tue, 01 Jan 2013 19:49:39 +0000

Acting at the last minute to keep the country from going off the so-called fiscal cliff, the Senate on December 31, 2012, passed the American Taxpayer Relief bill (H.R. 8) by a vote of 89 to 8. The bill permanently extends the tax cuts from the 2001 and 2003 tax acts with a few exceptions A 39.6 percent tax rate would apply to single filers with incomes over $400,000 ($450,000 for joint filers). The phase-out of itemized deductions would also return for single filers with incomes over $250,000 ($300,000 for joint filers). The estate tax exemption amount would be retained at an inflation adjusted $5,000,000 but the maximum tax rate is increased to 40 percent. The top capital gains rate would also be increased to 20 percent for higher income taxpayers. The bill would also permanently extend alternative minimum tax relief.

Five-year extensions are included for the American Opportunity Tax Credit, the Child Tax Credit, and the Earned Income Tax Credit. Most of the provisions that had expired at the end of 2011 were extended for two years, however, a number of the expired provisions were not included in the extension. The more popular individual and business provisions were extended, and several of those also including modifications. Bonus depreciation and small business expensing of capital acquisitions were included in the extensions.

The House is debating the legislation and may vote as soon as January 1 but it is not clear if the legislation has sufficient support to pass the House. President Obama supports the legislation.

House Passes Sequester Replacement Bill; Vote on “Plan B” Tax Cuts Pulled

CCH — Fri, 21 Dec 2012 14:39:41 +0000

(December 20, 2012) The House was poised to take up a two-part process to avert the fiscal cliff by holding separate votes on spending cuts (sequester) and tax cuts (Speaker Boehner’s “Plan B”) on December 20. Part one, the Spending Reduction Bill of 2012 (H.R. 6684) narrowly passed the House in a 215-209 vote. Part two, the Permanent Tax Relief for Families and Small Businesses Bill of 2012 (H.J. Res. 66) was pulled by House Republican leadership due to insufficient votes for passage. The House and Senate are now in recess until after the Christmas holiday.

The Spending Reduction Bill of 2012 would

Cancel the across-the-board sequester cuts scheduled to begin January 1, 2013
Provide for $300 billion in mandatory spending cuts over 10 years with an additional $19 billion in unspecified spending cuts

The Senate has already indicated that it will not take up H.R. 6684. The President had indicated his intent to veto it, should it, by chance, have passed the Senate.

The not-brought-to-vote Plan B tax measure would:

Indefinitely extend the Bush tax rates for income up to $1 million and impose a 39.6% rate on income in excess of $1 million
Indefinitely extend the current estate and gift tax rates and exclusion amounts ($5 million, as adjusted for inflation ($5.12 million in 2012) and a 35% rate))
Provide an AMT patch

The President had indicated his intent to veto the measure.

Free Version of New CCH Fiscal Cliff Estimator Now Available: The Early Advantage for Professionals, Self Tax Preparers

CCH — Thu, 20 Dec 2012 20:47:59 +0000

(RIVERWOODS, ILL., December 20, 2012) – Everyone can now see a clearer picture of how they may be impacted by various tax plans being debated in Congress with a free version of the CCH 2013 Fiscal Cliff Estimator. The premier tool, now available at CCHGroup.com/Estimator, provides a distinct tax planning advantage by comparing a taxpayer’s 2012 tax liability against various pending tax packages currently being debated. It includes the latest tax proposals from the White House and the Senate, the potential full extension of the Bush-era tax cuts, as well as their possible expiration at the end of the year.

“While everyone waits for resolution on fiscal cliff negotiations, CCH’s new Fiscal Cliff Estimator tool helps cut through all the uncertainty to paint a clearer picture of how certain scenarios may affect their tax returns,” said Cindy Kaplan, CCH Product Marketing Manager. “The Estimator is fully integrated with CCH’s latest projection and estimate data. It enables professionals to provide a tax planning advantage for their clients and also empowers individual taxpayers with an upper hand on research for planning ahead.”

How It Works

The Estimator comparison tool allows users to enter taxable income, capital gains and dividend income figures, and then select one or more of the three major plans to compare against the current 2012 tax scheme. It then provides estimated income tax figures with extensive details of each plan based on personalized inputs. The tool also organizes all the major tax topics currently on the negotiation table in a simple, easy-to-use layout.

Each tax scenario projection is also linked to CCH Tax Briefings that outline tax policies and tax planning considerations. CCH Tax Briefings explain and analyze potential tax policy impacts as well as provide summaries and comments on tax planning

strategies – depending on the final outcome of fiscal cliff negotiations. Seamless content integration offers a convenient way to consolidate various scenarios – providing quick insight on tax strategies for practitioners and taxpayers who prefer to prepare their own returns.

For More Information

To access the free CCH 2013 Fiscal Cliff Estimator tool, please visit CCHGroup.com/Estimator.

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