Tax Law Changes

After 2011, there is a Reduced Adoption credit. For 2012, the total expenses that may be taken as a credit for all tax years with respect to the adoption of a child by the taxpayer will be limited to $12,650 (down from $13,360 for 2011),
The credit for the adoption of a special-needs child will also be $12,650 (down from $13,360 for 2011).
Furthermore, the adoption credit will no longer be refundable.

There are more than 40 provisions that expired on 12/31/11 that Congress retroactively reinstated. A brief list that may affect taxpayers are:
Allowance of personal tax credits against regular tax and AMT under Code Sec. 26(a)(2).
Nonbusiness energy property credit under Code Sec. 25C.
Above-the-line deduction for up to $250 of certain expenses of elementary and secondary school teachers under Code Sec. 62.
Election for itemizers to deduct State and local general sales taxes under Code Sec. 164(b)(5) in lieu of a state and local income taxes
Above-the-line deduction for qualified tuition and related expenses under Code Sec. 222.
Treatment of mortgage insurance premiums as qualified residence interest under Code Sec. 163(h)(3)(E).
Tax credit for first-time District of Columbia homebuyers under Code Sec. 1400C(i).
Adoption assistance programs under Code Sec. 137.

New for 2011 and 2012 is a concept named portability which allows a surviving spouse's estate to use any portion of the exemption amount not used by the other spouse’s estate.
For decedents and gifts made in 2011, a unified credit of $1,730,800 is allowed which is the equivalent of a $5 million dollar exemption is subtracted from the tax calculated on the taxable estate.
For 2012 the $5 Million exemption may be increased for inflation.

The wage base for determining the maximum amount of income subject to social security taxes will be $110,100 for the year 2012.
Maximum 2012 employee Social Security Liability is $4624.20. .042%
For the years 2009 through 2011, the maximum wage base was set at $106,800.