Education credits delayed

The IRS has added form 8863, education credits, to the list of forms they will not process until February or March.  Returns that include form 8863 will not be accepted until the IRS says they are ready.

E-Filing Starting

     The IRS will begin accepting e-filed tax returns on January 30.  Most individuals will be able to e-file on this date.  Some taxpayers who use certain forms will still not be able to file until February and even March.  Click on this link to see the list of affected forms.  Probably the most common of these is form 4562 for depreciation and amortization.  Many taxpayers who have businesses use this form.  Many of the others are quite obscure.

News flash

The IRS will begin accepting electronic returns on January 30.  There will be a few types of returns that will require further updating by the IRS; such returns will not be accepted until a later, as yet unspecified date.  Check with your tax professional for details.

Tax legislation, effects on 2012

     Most of the fighting about the fiscal cliff was about things that will take effect in 2013, but a large number of items that affect 2012 taxes were finalized as part of the package.  Most of them simply continue measures that were in place for 2011, but would have expired for 2012 if no action had been taken.

     The biggest of these items concerns the Alternative Minimum Tax (AMT).  When this tax was put into place years ago, it was supposed to affect only high-income people.  Inflation was raising everyone's incomes up to the point where more than half of returns filed would be affected by it.  A "patch" was put into place for the last couple of years; the patch temporarily raised the AMT exemption levels sufficiently that it would bypass most people.  The patch was due to expire for 2012, and a lot of people would have gotten whacked.  This new legislation made the "patch" permanent.  Therefore far fewer people will have to worry about AMT for 2012.

     Another big one for businesses has to do with the purchase of machinery and equipment.  For the past few years, huge tax write-offs have been available on such items, as another measure to stimulate the economy.  These write-offs were supposed to be much reduced in 2012 and then expire in 2013.  But they have been extended for at least another year.

     In addition to that, a number of other deductions and credits which had been living on annual extensions for a couple of years have been extended again, and some have been made permanent.  These will be in effect for 2012.  Here are a few of them:
*Refundable child tax credit
*"Marriage penalty" relief
*Student loan interest deduction
*Teacher expenses deduction
*College tuition credits
*Direct donations from IRAs for people 70 1/2 years or older
*Certain renewable energy credits

     And many more.  Consult your tax professional for any that you believe specifically affect you.