Congress's last-minute 'fiscal cliff' deal extended many popular credits and deductions and permanently patched the Alternative Minimum Tax -- all good news if you're filing 2012 taxes.
This Jan. 9 photo shows H&R Block Tax preparer Tracey Wales, right, helping customer Muneer Sheikh prepare to file his taxes, in downtown Washington. More than 90 percent of taxpayers go to a tax preparer or use tax software to file their returns, estimates a 20-year IRS veteran.
Pablo Martinez Monsivais / AP
EnlargeTaxpayers preparing to file their 2012 returns can breathe a collective sigh of relief.
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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.
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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.
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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.
Source: http://rss.csmonitor.com/~r/feeds/csm/~3/7CDTpPjj53k/Filing-taxes-What-you-need-to-know
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