Tax Law Changes

For taxable years beginning in 2013, the credit allowed for an adoption of a child with special needs is $12,970. For taxable years beginning in 2013, the maximum credit allowed for other adoptions is the amount of qualified adoption expenses up to $12,970.
The available adoption credit begins to phase out for taxpayers with modified adjusted gross income in excess of $194,580 and is completely phased out for taxpayers with modified adjusted gross income of $234,580 or more.

For taxable years beginning in 2013, a taxpayer's (MAGI) modified adjusted gross income in excess of $53,000 ($107,000 for a joint return) is used to determine the reduction in the amount of the Lifetime Learning Credit.

For an estate of any decedent dying during calendar year 2013, the basic exclusion amount is $5,250,000 for determining the amount of the unified credit against estate tax.

The IRS today created an optional safe harbor method for individual taxpayers to use in determining the amount of deductible expenses attributable to certain business use of a residence during the tax year.
The new optional deduction under the safe harbor is capped at $1,500 per year. This cap is based on $5 a square foot for up to a maximum of 300 square feet.
Taxpayers claiming the new safe harbor will not be allowed to depreciate the portion of their home used in a trade or business, but can claim allowable mortgage interest, real estate taxes, and casualty losses on the home as itemized deductions on Schedule A, Form 1040.
These deductions will not need to be allocated between personal and business use, as required under the regular method.
Current restrictions on the home office deduction, such as the requirement that a home office must be used regularly and exclusively for business and the limit tied to the income derived from the particular business, still apply under the new option.

Beginning in tax year 2013 (generally for tax returns filed in 2014), a new tax rate of 39.6 percent has been added for individuals whose income exceeds $400,000 ($450,000 for married taxpayers filing a joint return). The other marginal rates of 10, 15, 25, 28, 33 and 35 % remain the same as in prior years.

Personal exemptions allow a certain amount per person to be exempt from tax. Due to the personal exemption phaseout , the exemptions are phased out for taxpayers with adjusted gross income (AGI) above a certain level.
ATRA, permanently extends the repeal of the personal exemption phaseout on incomes at or Below $250,000 (individual filers), $275,000 (heads of households) and $300,000 (married filing jointly) for tax years beginning after December 31, 2012.
Taxpayers with income above the listed amounts will be subject to the phaseout

The American Taxpayer Relief Act of 2012 permanently extends the repeal of the Itemized Deduction Phaseout on incomes at or Below $250,000 (individual filers), $275,000 (heads of households) and $300,000 (married filing jointly) for tax years beginning after December 31, 2012.
Taxpayers with income Above the above amounts will be subject to the phaseout.

For purchases made in 2011, 2012, and 2013: Aggregate amount of credit is limited to $500. Taxpayer is ineligible for this tax credit if this credit has already been claimed by the taxpayer in an amount of $500 in any previous year. For purchases made in 2009 or 2010: Aggregate amount of credit for all technologies placed in service in 2009 and 2010 combined is limited to $1,500

For 2012, the maximum deduction was set at $125,000 (inflation-indexed to $139,000) with a $500,000 threshold (inflation-indexed to $560,000). The new law restores the previous limits of a $500,000 maximum deduction and a $2 million threshold through 2013, retroactive to 2012