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Wednesday, January 11, 2012


The Tax Relief Act extended a variety of temporary individual tax provisions that had expired at the end of 2009 or were scheduled to expire at the end of 2010. They include tax credits, deductions and various tax incentives.
All of the following were extended for two years through 2012:
  • Marriage penalty relief (the increased standard deduction and expanded 15% bracket for married taxpayers filing jointly);
  • The $1,000 child tax credit amount (previously scheduled to revert to $500 after 2010) and the expanded refundability of the credit;
  • The increased starting and ending points for the earned income credit and the increase in the credit amount for families with three or more qualifying children;
  • The liberalized child and dependent care credit rules (allowing the credit to be calculated based on up to $3,000 of expenses for one dependent or up to $6,000 for more than one);
  • The American opportunity tax credit;
  • The higher contribution amount and other EGTRRA changes to Coverdell education savings accounts;
  • The enhanced rules for student loan deductions introduced by EGTRRA;
  • The exclusion for employer-provided educational assistance (Sec. 127); and
  • The exclusion for National Health Services Corps and Armed Forces Health Professions Scholarships (Sec. 117(c)(2)).

The following provisions were extended for one year through 2011:
  • The treatment of mortgage insurance premiums as interest (Sec. 163(h)(3)(E));
  • The parity for exclusion from income for employer-provided mass transit passes and parking benefits (Sec. 132);
  • The allowance for tax-free distributions from individual retirement plans for charitable purposes (Sec. 408(d)(8));
  • The temporary 100% exclusion of gain from the sale of certain small business stock under Sec. 1202, enacted by the Small Business Jobs Act of 2010, P.L. 111-240;
  • The deduction for tuition and related expenses (Sec. 222);
  • The state and local sales tax deduction (Sec. 164);
  • The deduction for elementary and secondary school teachers (Sec. 62(a)(2)(D));
  • The nonbusiness energy property credit (under the rules in effect before the American Recovery and Reinvestment Act of 2009, P.L. 111-5) (Sec. 25C);
  • The credit for first-time Washington, D.C., homebuyers (Sec. 1400C); and
  • The special rules for qualified conservation contributions by individuals (Sec. 170(b)(1)(E)).

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