While the many revived breaks under the American Taxpayer Relief Act of 2012 (ATRA) are good news for taxpayers, they would have been better news had they been signed into law earlier.

Because many breaks were retroactively extended back to Jan. 1, 2012, numerous IRS forms have to be updated accordingly. But the IRS couldn’t get started until after the changes were signed into law Jan. 2, 2013. And this means many taxpayers will have to wait to file their 2012 returns.

Both individual and business taxpayers are affected. Forms that need to be updated include those for:

• Qualified adoption expenses
• The general business credit
• The Work Opportunity credit
• The research credit
• Empowerment Zone and Renewal Community credits
• New Markets credits
• Various energy-related tax breaks for individuals and businesses

Some of these forms might not be updated until March. Please contact us if you have questions about when you can file your 2012 tax return.

Section 179 expensing allows businesses a 100% deduction for the cost of qualifying asset purchases. Its 2012 benefits were recently enhanced by the American Taxpayer Relief Act of 2012 (ATRA).

Sec. 179 expensing is subject to an annual limit, which is phased out if purchases exceed a designated threshold. So if total purchases are large enough, a business might not be eligible for any Sec. 179 expensing.

Before ATRA, the expensing limit for 2012 was $139,000, with a $560,000 phaseout threshold. The act increases these amounts to $500,000 and $2 million, respectively (the same amounts that applied in 2010 and 2011).

These increases mean not only that many smaller businesses can enjoy a larger tax benefit, but also that some larger businesses that previously wouldn’t have been eligible because their asset purchases were too high may now qualify.

The limits had been scheduled to drop to $25,000 and $200,000, respectively, in 2013, but ATRA also extends the higher amounts through 2013.

Many rules apply, so please contact us to learn if you qualify on your 2012 return — or discuss whether you should plan purchases this year to benefit from the break on your 2013 return.

The American Taxpayer Relief Act of 2012 (ATRA) revives for 2012 and 2013 the opportunity to make tax-free IRA distributions (up to $100,000 per year) for charitable purposes. If you’re age 70½ or older, you can make a direct contribution from your IRA to a qualified charitable organization without owing any income tax on the distribution. This “charitable IRA rollover” can be used to satisfy required minimum distributions.

To help taxpayers take advantage of the 2012 revival, ATRA allows a charitable rollover made in January 2013 to be treated for tax purposes as if it had been made Dec. 31, 2012. And if you took an IRA distribution in December 2012 and contribute it to charity in January 2013, the “direct contribution” requirement is waived; you can contribute the distribution to a qualified charity in January 2013 and treat it as a 2012 direct contribution, provided the other requirements are met.

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Business-related purchases of new or used vehicles may be eligible for Section 179 expensing, and business-related purchases of new vehicles may be eligible for bonus depreciation. But Sec. 179 expensing limits are scheduled to go down in 2013, and bonus depreciation is scheduled to disappear. So you might benefit from purchasing business vehicles before year end.

For 2012, the $139,000 Sec. 179 expensing limit generally applies to vehicles weighing more than 14,000 pounds. The limit is $25,000 for SUVs weighing more than 6,000 pounds but no more than 14,000 pounds.

Vehicles weighing 6,000 pounds or less are subject to the passenger automobile limits. For 2012, the depreciation limit is $3,160, but it’s increased by $8,000 for vehicles eligible for bonus depreciation.

Many rules and limits apply to these breaks. So if you’re considering a business vehicle purchase, contact us to learn what tax benefits you might enjoy if you make the purchase by Dec. 31.

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