5 Tax Trends That Could Cost You in 2012
"Not only is the top 35% rate bracket projected to rise from $379,150 to $388,350, but, as is the case for all individual taxpayers, the rise in the bracket amounts below the individual's top marginal rate (that is, the incremental value of the 10%, 15%, 25%, 28%, and 33% brackets for someone in the 35% marginal rate bracket) also benefits the individual taxpayer," CCH says. "As a result of the inflation adjustment in each of the brackets, someone filing a joint return with taxable income of $450,000 in 2012, for example, will pay $732 less in income taxes in 2012 than in 2011."
Among the new inflation-adjusted tax figures for 2012 is the estate tax exemption. Previously set at $5 million, an inflation adjustment means that up to $5.1 million of an estate will be exempt from the current 35% tax.
Also increasing are contribution limits to most retirement savings plans -- including 401(k), 403(b) and the federal Thrift Savings Plan -- from $16,500 in 2011 to $17,000 ("catch-up" contribution limits for those 50 and older remain at $5,500).
You don't tug on Superman's cape. You don't spit into the wind.
And, if you are a politician in an election year, you avoid anything other than sugarcoated tax discussions.
For months, Congress has punted any real discussion of taxes down the road, likely until after November's presidential and state by state contests. A wide range of political stalemates and temporary compromises mean a whole lot of uncertainty for taxpayers in the year ahead.
"One common theme during 2011 for practitioners and taxpayers was the lack of certainty in tax planning for future years," CCH Principal Tax Analyst Mark Luscombe says. "And that uncertainty was magnified by the scheduled expiration of many tax incentives after Dec. 31, 2011, and the end of the Bush-era tax cuts after 2012, due to extension by the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010."
Will the payroll tax cut continue beyond its temporary stay of execution? What's the fate of the Bush-era tax cuts (extended through 2012) and a variety of tax extenders? Will the maximum tax rate for capital gains increase to 20% from 15% or more if the Bush-era tax cuts expire?
Should the "rich" be taxed at a higher rate, a position taken by President Barack Obama and derided by conservatives?
Will there be changes to the personal exemption phase-out, something that would be a boon to wealthier Americans?