Inflation Adjustments
The
applicable amounts for many tax items
increased on Jan. 1, due to annual
inflation adjustments. Revised tax
tables are in effect, as well as an
increased personal exemption amount (now
$3,800) and standard deduction amounts.
Various credits and other items also
were adjusted (see
Rev. Proc. 2011-52). Contribution
limits and other amounts for pension
plans retirement accounts were also
changed for 2012 (see
IR-2011-103). The Social Security
wage base for 2012 is $110,100.
The
standard mileage rate for business use
of an automobile remains at 55½ cents
per mile for 2012; for medical and
moving expenses it decreases to 23 cents
per mile (Notice
2012-1), down a half-cent from the
second half of 2011.
Capital Gain and Loss Reporting
Taxpayers
will have to report new information on
Form 1040,
Schedule D, Capital Gains and
Losses, and file a new form,
Form 8949, Sales and Other
Dispositions of Capital Assets, to
report gains and losses of certain
capital assets. The information on Form
8949 will correspond to the new
information being reported on 2011
Forms 1099-B, Proceeds from
Broker and Barter Exchange Transactions.
Under
Sec. 6045, as amended in 2008, brokers
are required to report to the IRS and
their customers the customers’ adjusted
basis in securities sold and to classify
the customers’ gain as long term or
short term. This basis reporting applies
to covered securities acquired in 2011
and later (certain corporate stock in
2011 and other securities starting in
later years; see Sec. 6045(g)(3)(C)).
Individuals will be required to report
both short-term and long-term gains and
losses of capital assets in the
following three situations:
- When
basis was reported in box 3 of Form
1099-B;
- When
basis was not reported on Form
1099-B; or
- When
no Form 1099-B was received.
The
information from Form 8949 must then be
transferred to Part I of Schedule D,
which has been redesigned for 2011.
Veterans Work Opportunity Credits
The Three
Percent Withholding Repeal and Job
Creation Act, P.L. 112-56, extended the
work opportunity tax credit (now called
the returning heroes and wounded
warriors work opportunity tax credits)
for businesses that hire certain
military veterans. Employers will be
eligible for a credit of up to $9,600
for each qualified veteran that they
hire after the law’s enactment date
(Nov. 21, 2011) and before Jan. 1, 2013.
Under the
returning heroes tax credit, an employer
may be eligible for a credit of up to
$2,400 for hiring a veteran who has been
unemployed for at least four weeks and
up to $5,600 for hiring a veteran who
has been unemployed for more than six
months. Under the wounded warriors tax
credit, an employer may be eligible for
a credit of up to $9,600 for hiring a
veteran with a service-connected
disability who has been unemployed for
more than six months and up to $4,800
for hiring a veteran with a
service-connected disability (who does
not meet the returning hero credit
requirements) or who qualifies as a food
stamp recipient.
