Richard Hammar highlights the major changes from the Taxpayer Relief Act of 2012, and the effect these may have on churches and staff.
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CAROL STREAM, Ill., Feb. 28, 2013 /Christian Newswire/ -- Congress enacted the American Taxpayer Relief Act of 2012 in order to avoid the so-called "fiscal cliff." This act has two major features -- an increase in the tax rates paid by the wealthiest Americans, and an extension of several tax benefits that were set to expire.
Some of the tax benefits that have been extended include: lower income tax rates for most Americans; lower capital gains and income tax rates for most Americans; the enhanced child tax credit; marriage penalty relief; enhancements in the dependent care credit and earned income tax credit; the American Opportunity Tax Credit; and increased exemption amounts in computing the alternative minimum tax.
The American Taxpayer Relief Act of 2012 does not extend the reduction of Social Security taxes after 2012. The elimination of the reduction in the employees' share of Social Security taxes will result in a tax hike of two percent of earned income under $113,700. This increase will affect an estimated 77 percent of all taxpayers.
Some analysts are predicting charitable contributions will decline as a result of the American Taxpayer Relief Act. Taxpayers may cut back on their charitable contributions because of tax increases and the "Pease limitation." However, the tax-free distribution from individual retirement plans for charitable purposes was extended.
Along with a supplement that highlights the most relevant provisions of the Taxpayer Relief Act, the 2013 Church & Clergy Tax Guide provides comprehensive information for filing 2012 clergy returns and fulfilling federal reporting requirements for churches.
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