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President Obama on January 2 signed the American Taxpayer Relief Act of 2012. The new law makes permanent Bush-era tax rates for individuals and couples with annual income of $400,000 and $450,000, respectively. The law also permanently indexes the alternative minimum tax for inflation, extends unemployment insurance benefits for one year and extends numerous business benefits. The law does not continue the 2012 reduction in employment tax rates from 6.2 percent to 4.2 percent. The following ...

For two years, employees have enjoyed a 2% reduction in the FICA payroll tax. That will all come to an abrupt end beginning with their first payroll check in 2013 when the FICA rate returns to 6.2% (up from 4.2% in 2011 and 2012). Self-employed individuals will have a corresponding increase in their SE tax. The maximum wage subject to the FICA tax in 2013 is $113,700 (up from $110,100 in 2012). Thus, if you make $113,700 or more during the year, the result will be a $2,274 increase in payroll...

For several years now, Congress has left the taxpaying public hanging to the last minute with tax changes and extensions. And each year, the political gridlock seems to get worse, leaving taxpayers pondering how to plan their finances and businesses undecided about capital investments and hiring new employees, not knowing what the tax laws will bring in the next year. This year is even worse: It seems that our politicians are preoccupied with the elections and have put on the back burner a wh...

Uncertainty dominates year-end tax planning this year. Unless Congress acts, the Bush-era tax cuts will expire and bring higher tax rates and the loss of many deductions and credits starting in 2013. More individuals will be snared by the alternative minimum tax, which has not been patched for 2012 as it has for many years in the past. Even with the uncertainty, there are actions you can still take before the end of the year that can save a considerable amount of tax. Not all actions recommen...

As the end of the year approaches, many are looking for ways to reduce their business profits before year’s end. Here are some possible moves that might apply to your situation. Self-employed Retirement Plans - If you are self-employed and haven't done so yet, you may wish to establish a self-employed retirement plan. Certain types of plans must be established before the end of the year to make you eligible to deduct contributions made to the plan for 2012, even if the contributions are...

Unless Congress extends it, the American Opportunity Tax Credit (AOTC) expires at the end of 2012, leaving only the Hope and Lifetime Learning credit for 2013 and subsequent years. Where the AOTC provides a credit of up to $2,500 for qualified tuition and other related expenses for each qualifying student, the Hope credit maxes out at $1,950 (2013) and is only available for the first two years of post-secondary education. Up to 40% for the AOTC is refundable, while the Hope credit can only be...