As of this date, Congress still has not agreed on extending the Bush tax cuts or what changes will be made.
Employee portion of Social Security Tax: The 2% reduction in the employee portion of social security tax will also expire at the end of 2012, unless Congress extends this provision.
Also, the alternative minimum tax (AMT) patch has not been fixed for 2012. If Congress does not address this issue, 33 million taxpayers will be affected by AMT in 2012.
The only thing we know for certain is that two new Medicare surcharges, which are part of the Health Care Act, will go in effect for 2013 for single taxpayers over 200K in income and married taxpayers over $250K.
There will be a 0.9% surtax imposed on wages and self-employed earnings in excess of those amounts. And, there will be a 3.8% surtax on the lesser of net investment income or the excess of AGI over those levels.
Tax-related identity theft is likely to result in slower refunds next year, according to IRS officials. Fraudsters take stolen Social Security numbers and file for unauthorized refunds early in the filing season. Victims discover that their identity has been stolen only after their true tax return filing is rejected. The problem is increasing rapidly. IRS will take measures to stop phony refunds, but as a result, the agency will end up taking longer to issue refunds to taxpayers.
IRS won’t be giving precise dates for refunds in the upcoming filing season. This past winter, many taxpayers complained that the refund date shown on the IRS “Where’s My Refund” page was inaccurate. The problem was compounded when a glitch caused refund delays for some early filers. The Service now has decided to fuzz the refund date. Filers who are seeking the status of their refunds will be told that refunds will generally be paid within 21 days of the date of the return was filed.
In 2013, there will be an increase from 7.5% to 10% in the threshold for deducting medical expenses.
CHILD CARE TAX CREDIT:
Unless Congress acts differently, the Child Tax Credit for children under 17 will be reduced from $1,000 per qualifying child to the pre-Bush tax cut level of $500 for 2013 and later.
Employees flexible spending accounts will be reduced from $5,000 to $2,500 beginning in 2013.
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