J.K. Lasser's Your Income Tax 2013: For Preparing Your 2012 Tax Return

Looking Ahead to 2013

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Fate of Bush-era tax cuts

The Bush era tax cuts expire at the end of 2012. Their future was not decided when this book went to press. Prior to the 2012 elections, political gridlock kept Congress and the Administration from agreeing on an extension of the tax breaks or on a partial cutback. After the 2012 elections, there may be an agreement to extend the tax breaks for one year while a more permanent set of tax rules is worked out, but nothing is certain.   At stake are numerous income tax breaks, everything from tax rates to various deductions and credits. Scheduled cutbacks will take effect automatically in 2013 unless Congress acts. For example, without an extension of the 2012 rules, the 10% tax bracket would disappear, and the top two rates on ordinary income would increase to 36% and 39.6%. Tax rates on long-term capital gains would increase. The 0% capital gains rate for 10% and 15% bracket taxpayers would disappear and the 15% rate would increase to 20% (10% if in the 15% bracket), with a rate of 18% (8% if in the 15% bracket) for sales of assets held over five years. Qualified dividends, which through 2012 are taxed at capital gain rates, would be taxed at ordinary income rates after 2012. Without an extension of the 2012 rules, marriage penalty relief that has benefited married couples filing jointly with respect to the limit for the 15% bracket and the amount of the basic standard deduction would be cut back. Some upper-income ...