Intuit Accountants News Central

Year-End Tax Law Changes

Article Post Date
December 7th 2012 by Mike D'Avolio

Most of the action this season centers around whether the government will extend the many tax breaks that expired at the end of 2011, such as the tuition and fees deduction and the sales tax deduction. Congress will be debating the fate of this extender legislation through the end of 2012. Other Tax Year 2012 changes include the following: a revised work opportunity credit and depreciation deduction adjustments (bonus depreciation and section 179 expense).

Extender Legislation

The following list shows the many tax measures that expired at the end of 2011 and will impact tax year 2012 unless the government decides to extend them.

Individual provisions:

Note: The government could let certain provisions expire for upper income taxpayers.

Business provisions:

Depreciation

For assets placed in service after December 31, 2011 and before January 1, 2013, the bonus depreciation percentage will drop from 100% to 50%. For tax years beginning after December 31, 2011, the section 179 expensing limit will drop from $500,000 to $139,000 and the phase-out threshold will drop from $2,000,000 to $560,000.

Off-the-shelf software will continue to qualify for section 179 expensing through 2012 only. The election to accelerate the alternative minimum tax credit in lieu of claiming bonus depreciation will continue through 2012 only.

Work Opportunity Credit

The work opportunity credit has been extended for one year into 2012 for companies that hire veterans. The maximum credit is equal to $5,600 for hiring a veteran who has looked for work over 6 months. The maximum credit increases to $9,600 for businesses hiring disabled veterans.

Roth IRAs & Designated Roth Accounts

Taxpayers could have elected to include in income 100% of 2010 Roth conversions and rollovers to designated Roth accounts. If this election was not made, one half of the 2010 taxable amount would have been deferred into 2011 and the other half into 2012.

Form 1099-K Reporting

As was the case last year, there will be no direct reporting of amounts from Form 1099-K, Payment Card and Third Party Network Transactions, on the tax return. This includes Forms 1120, 1120S and 1065; and Schedules C, C-EZ, E and F. The IRS has removed the Form 1099-K line items on these forms and schedules for tax year 2012. However, Form 1099-K is still required to be filed with IRS.

Editor’s Note: Be sure to check out the article, “Generating 1099s in QuickBooks” by Woody Adams.

Informational reporting of employer-sponsored group health plan coverage

Reporting the cost of employer-sponsored group health plan coverage on an employee’s Form W-2 is optional for the business if:

Partnerships

Partnerships are now allowed to provide Schedule K-1s electronically to its partners. The recipient must affirmatively consent and the furnisher of the K-1 must provide a disclosure statement that details the arrangement.

2012 Standard Mileage Rates

Additional resources on extender legislation:

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  • About Mike D'Avolio

    Mike D'Avolio Mike Davolio, CPA, Senior Tax Analyst - With Intuit / Lacerte since 1987 - Monitor legislative and regulatory activity - Circulate information to employees and customers - Analyze and test software - Train employees and customers - Government liaison - Public relations representative   See all of Mike's articles…

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