Archive for the ‘Legislation’ Category

July Law Contains New Tax Compliance Rules

August 22, 2015

Seal of the U.S. CongressJust as highway funds were set to run out, Congress passed a highway bill and President Obama signed it into law July 31, 2015. To pay for the bill without raising tax rates, Congress included some new compliance provisions that will affect some recipients of inherited property, owners of partnership interests, and taxpayers with mortgages.

details: Surface Transportation Act of 2015

Extenders: Baucus Balks

September 23, 2013

Senator Max Baucus of Montana, chairman of the Senate Finance Committee, says he’s had it with extenders. These are tax benefits that have expiration dates but regularly get renewed, usually for a period of just a year or two. Individuals rely on a number of these, such as the itemized deductions for state and local sales tax and private mortgage insurance (PMI). Several of them are important to businesses as well.


Obama to Propose Retirement Account Cap

April 9, 2013
By Kaye A. Thomas

The Obama administration has revealed that the budget proposal to be published later this week will include a $3 million cap on retirement accounts.


Tax Rules Extended by ATRA

January 12, 2013

The American Taxpayer Relief Act of 2012 provides “taxpayer relief” primarily by extending tax benefits that were scheduled to expire. Here is a list of the extensions that are of most interest to individual taxpayers. Changes labeled “permanent” can be altered by an Act of Congress but will not expire automatically.

ATRA Tax Rates for Capital Gain and Dividends

January 12, 2013

The American Taxpayer Relief Act of 2013 (“ATRA”) made important changes in the way long-term capital gain and qualified dividend income are taxed. Here’s an explanation, in Q&A format.


Qualified Charitable Distribution Transition Rule

January 11, 2013

The American Taxpayer Relief Act of 2012 (ATRA) extends the tax treatment of qualified charitable distributions from IRAs, so that they are available for 2012 and 2013. Because this law wasn’t enacted until January 2013, it includes a special transition rule. You can take advantage of this rule retroactively for 2012, but only if you act before the end of January 2013.


CCH Gets Political?

January 4, 2013

“The new law effectively raises taxes for all wage earners (and those self-employed) by not extending the 2012 payroll tax holiday that had reduced OASDI taxes from 6.2 percent to 4.2 percent.”

We were surprised to see this statement in a release from CCH, which is generally known for highly accurate, and studiously nonpolitical, reporting of tax developments. It’s well known that the payroll tax holiday was always intended as a temporary measure that would expire when the economy was in recovery. An extension of this measure was never part of the fiscal cliff discussions leading to enactment of the American Taxpayer Relief Act of 2012 (“ATRA”).

The suggestion that ATRA was somehow responsible for terminating this measure has become a talking point for conservatives who want to pretend that the law raises taxes on middle income taxpayers. CCH dropped the ball in permitting a misleading, partisan statement in one of its normally neutral tax reports.

American Taxpayer Relief Act

January 3, 2013
By Kaye A. Thomas

In a last gasp effort Congress passed legislation to avert the fiscal cliff and prevent tax increases on 98% of Americans. Key features of the American Taxpayer Relief Act of 2012 (“ATRA”) include the following:

  • Existing income tax rates (including marriage penalty relief) are preserved for taxpayers with income up to $400,000 ($450,000 for couples filing jointly). A tax rate of 39.6% applies above that level.
  • Qualified dividends will continue to be taxed at capital gain rates, but a 20% rate will apply to both of these beginning at the income thresholds mentioned above.
  • The personal exemption phaseout and the Pease rule for reducing itemized deductions are revived, but at higher income levels than under prior law.
  • The law permanently fixes the alternative minimum tax (“AMT”), eliminating the recurring need for an “AMT patch.”
  • Seemingly out of nowhere, the law expands the availability of in-plan Roth conversions.
  • The estate tax provisions are more generous than might have been expected, retaining the $5 million exemption and raising the rate by only 5 percentage points, to 40%.


ATRA Fix for Alternative Minimum Tax

January 3, 2013

The American Taxpayer Relief Act of 2012 (“ATRA”) permanently fixes the alternative minimum tax, or AMT, indexing it for inflation and preventing it from disallowing certain personal credits. The practical effect of this fix is to maintain, and permanently preserve, the status quo. It means the impact of the AMT in future years will be essentially the same as it has been in the past.

ATRA Tax Increase or Tax Cut?

January 3, 2013

The American Taxpayer Relief Act of 2012 (“ATRA”) is being described by many (including both Republicans and Democrats) as a tax increase of more than $600 billion. At the same time, from a different perspective, it’s a tax cut — and one of the largest in history.


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