Two Monday of the New Year & Washington Politics...

Mr Robin B Tucker www.nwyc.com   Fact Sheet on Fiscal Cliff Agreement   After two years of party wrangling, Congress has passed and President Obama has signed a permanent extension of the Bush-era tax breaks for individuals with annual incomes up to $400,000 and couples with annual incomes up to $450,000. Here is a look at the highlights of the new law. Small Business Tax Breaks Business Equipment Write-off: Retroactively increases 2012 maximum expensing amount from $139,000 to $500,000 and extends this amount through 2013. It also reinstates the $250,000 write-off of qualified real property improvements. Bonus Depreciation: Extends for one year, into 2013, accelerated “bonus” depreciation of business investments in new property and equipment tax deductions. Individual Breaks Income Tax Rates: Rates remain the same for couples with taxable annual incomes under $450,000. Those with over $450,000 will see their top rate go from 35% to 39.6%. Dividends and Capital Gains: The maximum rate remains at 15%, except for joint filers making more than $450,000. That maximum rate will be 20%. The President had proposed a top rate of 39.6% for dividends prior to the agreement.      Estate Tax: The amount of an estate exempt from the tax remains at $5 million for individual estates and $10 for family estates. The maximum tax rate increases from 35% to 40%.  The sharing of unused exemption amounts between spouses is also still alive.   Personal Exemptions and Itemized Deductions: The personal exemption and itemized deductions will be reduced for families earning more than $300,000. Alternative Minimum Tax (AMT): The law provides a permanent patch to keep more Americans from being subject to the increased tax level, and indexes it for inflation. The change prevents a tax increase that would have affected an estimated 30 million additional taxpayers. Unemployment Benefits: Unemployment benefits for the long-term unemployed are extended through 2013. Tax Credits: A five-year extension of tax credits was given to the child tax credit, earned Income tax credit and the college tuition tax credit. Medicare Doc fix:  A 27% reduction in payments to Medicare providers is postponed for 2013. Automatic Across-the-Board Spending Cuts: The sequester of funds will be delayed by two months and replaced with new half revenues and half targeted spending cuts. Other Breaks: Deductions for educator supplies,  sales tax, college tuition and exclusion for home mortgage debt were retroactively  included in the new law. Tax Increase Payroll Tax: The temporary 2% cut to the employee payroll tax rate was not renewed.   The information contained herein is general in nature and is not intended as legal, accounting or tax advice or opinion as provided by National Write Your Congressman. The reader should seek professional guidance prior to taking any action based upon this information. National Write Your Congressman shall have no obligation to inform the reader of any changes in tax laws or others which may affect the information provided. Thank you for being a responsible American; your voice is making a difference.