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With the Mayan end of world threat over, it’s time to focus on the fiscal cliff

December 26, 2012

Welcome back from your holiday festivities. I hope you got everything you asked of Santa.

Not to run the Jan. 1, 2013, deadline into the ground, but since we avoided the Mayan end of days, the possible coming U.S. financial calamity has totally taken center stage.

So now we get to wait to see if there will be a post-Christmas miracle in the form of a fiscal cliff deal.

Senators and the President are expected back in their offices on Thursday, Dec. 27. Representatives are awaiting word to return to Capitol Hill.

Right now it's looking more and more likely that at best a partial deal will be reached to keep tax rates at the Bush tax cuts level for most taxpayers. Other details then must be worked out when the new Congress convenes in 2013.

In case you forgot in the wake of holiday merry making, the infographic below provides a quick look at the tax matters that matter in the fiscal cliff debate.


Bankrate.com Quiz: Check out your 'fiscal cliff' knowledge

Among the things most folks are hoping will be done in the next few days are a patch to the alternative
minimum tax, or AMT
, so that they aren't among the estimated 60 million
who'll owe this more expensive parallel tax, and approval of the extenders,
technically temporary tax provisions that expire every year or so and are renewed.

House Speaker John Boehner included an AMT fix in his Plan B that his Republican colleagues rejected just before going on holiday breaks. But at least he created a framework — and one that includes proposed 2012 AMT exclusions of $78,750 for joint filers and $50,600 for single taxpayers and which would be indexed for inflation so we wouldn't find ourselves in this predicament year after year after year — from which to start in these hectic closing days of 2013.

Similarly, the Senate Finance Committee gave its stamp of approval to most of the extenders in a bill it moved through that tax-writing committee last summer. It, too, is a good foundation to use for approving these tax provisions, which include such popular tax provisions as:

Educators above-the-line $250 deduction for certain out-of-pocket classroom supplies.

Tuition and fees for higher education tax break, also an above-the-line claim, worth up to $4,000.

Private mortgage insurance (PMI) premium
deduction as itemized mortgage interest for tax years 2012 and
2013.

State and local sales taxes
continuation as Schedule A itemized deductions, benefiting taxpayers who live in one of the seven no-income-tax states or who find that the sales tax write-off is worth
more to them than the state and local income tax itemized deduction.

Roll over of an IRA required minimum distribution (RMD) to charity so the taxpayer can meet the withdrawal requirement but avoid including the retirement fund money as a taxable
distribution.

The Senate Finance members also OK'ed AMT relief
with exemption numbers for 2012 identical to Boehner's proposal. But
instead of indexing after that, the Senate tax writers propose AMT
exemptions of $51,150 for individuals and $79,850 for married filing
jointly spouses
in 2013.

Here's hoping that we all get a few after-the-fact tax presents in the next few days. I'm leaving my Christmas tree up for a while just in case.

You also might find these items of interest:

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The More Tax Posts tab at the top of this page will take you to, well, more tax posts. You also can search below for a tax topic. 

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TAX-SAVVY WAYS 
TO WRAP UP 2026

It’s over! With October’s extended filing deadline behind us, it is now time to focus on year-end moves to reduce your 2026 tax bill. 

You’ll find ways to do just that on the Tax Tips page (see the More Tax Posts drop-down menu at the top of the blog), as well as the separate tax tip pages for each month, notably October through December. If you’re on the Tax Tips page, you’ll find a monthly list at the end of this column. If you’re on another blog page, you can head straight to the October tips; at the bottom of that tips page you’ll find links to all the other 11 months’ collections of tax advice.

Not to spoil what you’ll find in that tax advice, but it does cover such things as tax deductions for charitable donations, investment moves that could reduce tax due, and ways to max out your tax-favored retirement savings. 

Finally, as the year winds down, things get hectic. There are lots of other things to occupy our time, like the much more fun upcoming holidays. But don’t lose sight of taxes, since timing is key. To be of use, most tax moves must be made by the end of the tax year. That’s Thursday, Dec. 31, which also is the last business day of the year. 

So that you don’t miss that final tax year deadline, also keep an eye on the countdown clock below. It will keep you on top of just how much time is left to make important, tax-saving moves. (Note: I’m in the Central Time Zone, so adjust accordingly for where you live.)

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