As you assemble the paperwork you’ll need to file your 2012 tax return, take a minute to review some last-minute moves you could make to cut last year’s tax bill. Also, pay attention to deductions you shouldn’t overlook. Here’s a quick checklist.
- The American Taxpayer Relief Act, signed into law on January 2, 2013, has some tax-savers for 2012. The law restored for 2012 through 2013 the following tax breaks:
* The optional deduction for state and local sales taxes in lieu of deducting state and local income taxes.
* The above-the-line deduction for up to $4,000 for qualified tuition and related expenses.
* The above-the-line deduction for up to $250 of classroom supplies purchased by teachers.
* The exclusion from income for cancellation of mortgage debt of up to $2 million on a principal residence.
* The deduction for mortgage insurance premiums.
* The tax credit for making energy-saving home improvements.
- If you’re in business, the new law included some tax breaks you shouldn’t overlook. The first-year expensing option for equipment purchases in 2012 was increased to $500,000, with a $2,000,000 total limit. The research tax credit, the work opportunity credit, and the 15-year recovery period for qualified leasehold and retail improvements and qualified restaurant property were all made available for 2012.
- If you qualify, you have until April 15 to make a deductible 2012 IRA contribution. The maximum 2012 contribution is $5,000 if you’re under age 50 and $6,000 if you’re 50 or older.
- The $2,500 deduction for student loan interest is still available for 2012 and can be taken even if you don’t itemize deductions on your return.
The tax law gets more complicated every time Congress passes another bill, but don’t let your tax bill creep higher than necessary through oversight. Call our office if you want details on any of these or other ways to cut your 2012 tax bill.