1. Your taxes are going up. Although the approved deal raises tax rates only on individuals with income over $400,000 and families with income over $450,000 (their top tax rates will increase to 39.6%, up from 35% in 2012), the deal did not save the Payroll Tax Holiday. Therefore, the payroll tax immediately rises back to its 2010 level resulting in a rate that increases from 4.2% in 2012 to a new rate of 6.2%. The Tax Policy Center reports that the “average federal effective tax rate will be 21.7 percent and the average increase is $1,257.”
2. Millions of taxpayers will be spared from the Alternative Minimum Tax. Time Magazine reports, “According to one GOP estimate, 28 million families would have had to pay an average of $3,400 in extra taxes this year without the AMT fix. About four million taxpayers owed the AMT in 2011, up from about 1.3 million in 2001, according to the Tax Policy Center.”
3. Phase-out of personal and dependent exemption deductions for married taxpayers with an AGI of $300,000 or more and single taxpayers with an AGI of $250,000.
4. Phase-out of itemized deductions if your AGI exceeds $250,000 for single taxpayers and $300,000 for married joint-filing taxpayers.
5. The American Opportunity Tax Credit, the Child Tax Credit and the Earned Income Tax Credit all survived and will be on the books for the next five years.
6. Section 179 has been increased retroactively for 2012 and 2013. With the new deal in place, Section 179 has been increased retroactively for 2012 from $139,000 back to $500,000. The new law extends the $500,000 limit through 2013, and pushes the $25,000 cap to 2014. Section 179 is available only to companies with total capital expenditures for the year under a certain threshold — $2 million through 2013 and $200,000 starting in 2014.
7. 50 percent bonus depreciation for capital expenditures has been extended through 2013.
8. The Research and Development Tax Credit has been renewed retroactively for 2012 and “prospectively for 2013.”

The post 8 Things to Know about the Fiscal Cliff Deal and Your Pocketbook appeared first on TEQlease Capital.

Section 179 Deduction. If you acquired assets for your business in 2012, you may be able to deduct up to $139,000 of the cost of qualifying new and used business equipment placed in service in 2012.The Section 179 deduction is scheduled to drop significantly to just $25,000 in 2013 unless Congress intervenes. In 2011, the deduction was $500,000 of qualifying new and used assets.  Keep in mind, your business must turn a profit in 2012 in order to take advantage of the deduction. You can read more about our Section 179 advice here.

Reinvested Dividends. Although this isn’t a deduction or tax credit, according to Kiplinger this is an “important subtraction that can save you a bundle.” If your mutual fund dividends are automatically used to buy extra shares, your tax basis in the fund is increased with each new reinvestment. Kiplinger advises that investors be careful not to forget including the reinvested dividends in your tax basis—failing to do so may result in double taxation of the dividends.

American Opportunity Credit. If you have a child in college then make sure you understand whether the American Opportunity Credit applies to you. Under the credit, taxpayers can get a reduction in their tax bill of up to $2500 per student provided the tax filers have an adjusted gross incomes of less than $80,000 a year (if single) or $160,000 (if they file jointly). An eligible family with two kids in college could get a tax credit of $5,000. Best part about the credit is that it covers all four years of college. In order to get the credit, you will need to fill out IRS form 8863.The tax credit is set to expire at the end of 2012.

Student Loan Interest.  If you are paying back your child’s student loan, and your child is no longer a dependent, your child is eligible to deduct up to $2500 of student loan interest you paid. However, parents can’t claim the interest deduction since they are not liable for the student loan debt.

Medicare Premiums for Self Employed. If you own your own business and are qualified for Medicare, you can deduct the premiums for Medicare Part B and Medicare Part D as well as supplemental Medicare (medigap) policies. According to Kiplinger, “you can’t claim this deduction if you are eligible to be covered under an employer-subsidized health plan offered by your employer.”

Retirement Accounts. Taxpayers have till April 15, 2013 to set up a new IRA or add to an existing IRA and have it count for your 2012 tax return.

Small Business Health Care Tax Credit. Small businesses that pay at least half of your employees’ health insurance premiums may be eligible for a tax credit of up to 35 percent of the premiums paid. You can find more information at the IRS web site.

Storm Damage Tax Breaks. If you sustained property damage this year from natural disasters such as hurricanes, floods, blizzards, tornadoes and earthquakes, your losses may be deductible if they are not reimbursed by insurance reports Joy Taylor for Kiplinger. However, to claim the deduction, if your property is insured you must file a claim before taking the deduction. Kiplinger created a calculator to help figure out your storm damage deduction.

Baggage Fees. Did you travel on business in 2012? If you are self-employed you may be able to deduct these fees. Make sure to track these fees and add them to your deductible travel expenses.

Home Energy-Saving Credit. This credit is still available contrary to what many taxpayers may think. While it is true you can no longer get a credit for windows, doors, air conditioning, and insulation, you still can get a 30% refund of the cost of “installing qualified residential energy equipment, such as solar hot water heaters, geothermal heat pumps and wind turbines” reports Kevin McCormally for Kiplinger.

The post Tax Tips for the End of 2012 appeared first on TEQlease Capital.

Here’s how.

Savings for College Students

Books. No need to pay the full list price on textbooks at your college bookstore anymore. Through online comparison books sites like BestBookBuys.com and Big Words you can search for the lowest prices on books in all types of medium including e books, international editions or used books across thousands of sellers . You can also compare the cost of buying versus renting on these sites as well.

Cut tuition costs by claiming AP Credits. By now, incoming freshmen have received their AP scores. Check out www.collegeboard.com/ap/creditpolicy to see if your score may have earned you college credit. If you are just starting college but have sophomore standing due to AP credits you may be able to save a year’s worth of tuition and other expenses by graduating early. Make sure to notify your college about your scores.

Healthcare.  Make sure you are not paying double. Many colleges charge a built-in fee for health insurance through the college. If your child is insured under your policy, appeal this amount. This can save you anywhere from $500 to $1000 or more per year.

Claim the higher education tax credits. Under the American Opportunity Credit, taxpayers can get a reduction in their  tax bill of up to $2500 per student provided the tax filers have an adjusted gross incomes of less than $80,000 a year (if single) or $160,000 (if they file jointly). An eligible family with two kids in college could get a tax credit of $5,000.

Savings for Everyone

Use Twitter and Facebook to search deals. Really. Follow your favorite retailers to make sure you receive their specials and alerts to sales. You can also bookmark CouponTweet.com. According to the site, “Coupon Tweet searches Twitter* for the best deals and discounts so you don’t have to. Search for everything from underwear to Urban Outfitters, electronics & software to cars, clothes, Target” and more.

Time your purchases. If you have a little time to wait for a certain back to school item, you should check out the website CamelCamelCamel.com.  The site “provides free Amazon price drop alerts and Amazon price history charts, helping you decide when the price is right.”

Find free shipping codes. Make sure to take the time to hunt down free shipping codes for the item you want. Simply enter in the store name and free shipping in the search bar to see if there is a code. You can also check out FreeShipping.org. The site partners with more than 4,000 merchants to provide users with free shipping offers.

Search for coupons. Don’t forget to look for coupons. If you are still getting a Sunday paper the coupon insert is an excellent place to start. You can also go online and search for coupons at Redplum, Coupons.com, and CouponMom.com.

The post Eight Tips for Back to School Savings for Grade School through College Age Students appeared first on TEQlease Capital.

Section 179 Deduction. If you own a small or midsize business and acquired assets for your business in 2011, you may be eligible to deduct up to $500,000. For more information about this deduction, you can read our recent post “End of Year Tax Tips” as well as the IRS publication “Bonus Depreciation and Increased Section 179 Deduction under the American Recovery and Reinvestment Act”.

Reinvested Dividends. Although this isn’t a deduction or tax credit, according to Kiplinger this is an “important subtraction that can save you a bundle.” If your mutual fund dividends are automatically used to buy extra shares, your tax basis in the fund is increased with each new reinvestment. Kiplinger advises that investors be careful not to forget including the reinvested dividends in your tax basis—failing to do so may result in double taxation of the dividends.

Additional Bonus Depreciation. If you are a business owner, don’t forget you can write off 100%of qualifying new (not used) assets—including most software, vehicles, and equipment in general.

American Opportunity Credit. Do you have a child in college? Then don’t forget to claim the higher education tax credits. Under the credit, taxpayers can get a reduction in their tax bill of up to $2500 per student provided the tax filers have an adjusted gross incomes of less than $80,000 a year (if single) or $160,000 (if they file jointly). An eligible family with two kids in college could get a tax credit of $5,000. Best part about the credit is that it covers all four years of college. In order to get the credit, you will need to fill out IRS form 8863.The tax credit is set to expire at the end of 2012.

Student Loan Interest.  If you are paying back your child’s student loan, and your child is no longer a dependent, your child is eligible to deduct up to $2500 of student loan interest you paid. However, parents can’t claim the interest deduction since they are not liable for the student loan debt.

Medicare Premiums for Self Employed. If you own your own business and are qualified for Medicare, you can deduct the premiums for Medicare Part B and Medicare Part D as well as supplemental Medicare (medigap) policies. According to Kiplinger, “you can’t claim this deduction if you are eligible to be covered under an employer-subsidized health plan offered by your employer.”

Retirement Accounts. Taxpayers have till April 17, 2012 to set up a new IRA or add to an existing IRA and have it count for your 2011 tax return.

Small Business Health Care Tax Credit. Small businesses that pay at least half of your employees’ health insurance premiums may be eligible for a tax credit of up to 35 percent of the premiums paid. You can find more information at the IRS web site.

The post Eight Overlooked Tax Deductions appeared first on TEQlease Capital.