Follow @LawrenceRYoder
Horizon Accountants  

Horizon Accountants
113 South Timber Way
Broadway, VA 22815

540-896-3330

Certified Public Accountant

Horizon Accountants’ Tax Update

January 5, 2013

RE: 2012 Tax Update

Dear clients,

Thanks to the January 1, 2013 Fiscal Cliff Tax Bill most of the key provisions remain intact for 2012. The most significant change is in Section 179 expensing of asset purchases for businesses and bonus depreciation. Expensing is capped at $139,000 and bonus depreciation on new equipment is 50% of purchase price. The 50% bonus depreciation has been extended for 2013 and 2013 Section 179 has not been determined for sure. This will be decided in pending legislation passed during 2013.

An important change in estate tax has raised the bar to $5,000,000 to exempt from taxation at time of death. This protects most families and small businesses from needing to liquidate holdings to pay estate tax. A key provision makes permanent the Bush tax cuts for those in the 10 and 15% tax brackets. Capital gains and dividends in these brackets will be taxed at 0%.

A new Medicare tax is scheduled to apply to those families with adjusted gross incomes greater than $250,000 beginning in 2013. An additional tax of .09 % of earned income over this threshold and 3.8 % of passive income over this threshold is added (based on a separate calculation). Another part of the Obama Care Bill is the threshold for medical expenses is now 10% of adjusted gross income. This too begins in 2013.

There is good news to report about the Alternative Minimum Tax situation as the annual exemption amount has been increased permanently to keep most out of this tax each year. The Alternative Minimum Tax is a parallel tax system that every individual and family has to calculate to compare to the regular tax system and pay whichever is higher. The AMT claws back certain favorable deductions in the regular tax system thereby increasing its base for some. We as preparers calculate AMT for each return filed.

The standard mileage rates for 2012 for business are 55.5¢. The rate for medical and moving mileage is 23¢. Congress sets the charitable mileage and it remains at 14¢ a mile. Parking and tolls are in addition to mileage.

The standard mileage rates for 2013 on business mileage are 56.5¢. The rate for medical and moving mileage is 24¢. Congress sets the charitable mileage and it remains at 14¢ a mile. Parking and tolls are in addition to mileage.

We look forward to visiting with you and preparing the best possible return for you in 2013! Please call if you have questions or want further clarification.

Sincerely,

Lawrence R. Yoder, CPA
HORIZON ACCOUNTANTS

Home  |  Services  |  The Market  |  About Us  |  Find Us  |  2014 Tax Letter  |  Tax Letter Archive

Copyright © 2004 - Horizon Accountants & Mountain View Product Marketing, Inc. All Rights Reserved.
Created by Mountain View Product Marketing, Inc.   Hosted by ShenValleyOnline.net.

 
Valid HTML 4.01! Valid CSS!