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Disclaimer:  Although the information below is presented in good faith and believed to be correct, we make no representations or warranties as to its accuracy or completeness.  This information is not intended to be construed as legal, accounting, tax or any other form of professional advice.  This information is supplied upon the condition that the person receiving same will make their own determination as to its suitability for their own purposes. Under no circumstances will be held liable for any damages of any nature for any reliance upon the information contained herin.


TAX Taxable Income      
TABLE Tax Rate Over Up to PERSONAL EXEMPTION: $3,800
10% $- $17,400
Married 15% $17,400 $70,700 STANDARD DEDUCTIONS:
Filing 25% $70,700 $142,700 Married Filing Joint $11,900
Joint 28% $142,700 $217,450 Single and Married Filing Separately $5,950
33% $217,450 $388,350 Head of Household $8,700
35% $388,350 no limit
10% $- $8,700
15% $8,700 $35,350 Traditional and Roth IRA Contribution $5,000
     Single 25% $35,350 $85,650 Catch Up Contribution for Age 50 and Older $1,000

28% $85,650 $178,650
33% $178,650 $388,350 Simple IRA $11,500
35% $388,350 no limit Catch Up Contribution for Age 50 and Older $2,500
Tax Rate Over Up to
10% $- $12,400 SEP IRA $50,000
15% $12,400 $47,350 (Maximum Compensation Considered) $245,000
Head 25% $47,350 $122,300
Of 28% $122,300 $198,050 401K / 403(b) / Section  457 Plans $17,000
Household 33% $198,050 $388,350 Catch Up Contribution for Age 50 and Older $5,500
  35% $388,350 no limit    
Health Savings Account Contribution Limits:  
     Single Coverage  (minimum deductible-$1,200): $3,100
     Family Coverage (minimum deductible-$2,400): $6,250
    *HSA holders age 55 and older are allowed an additional $1,000 contribution.  
Annual Gift Tax Exclusion:  $13,000 ($26,000 if gift-splitting election is made)
Child Tax Credit:  $1,000  
Limit on Itemized Deductions:  Repealed through 2012
Social Security Wage Base:  $110,100
    -Earnings cap to avoid reduced social security benefits before year full retirement age is met:  $14,640
    -Earnings cap to avoid reduced social security benefits in year full retirement age is met:         $38,880
Earned Income Credit Information:

The Earned Income Credit applies to working taxpayers who's income falls below certain thresholds.  The maximum Earned Income Credit available has been raised to $5,891.  This is a refundable credit, so even if you have no taxable income, you may still qualify for this credit.  The 2012 thresholds are as follows:

  •     No Children - earnings and AGI must be less than $13,980 or $19,190 if married filing jointly.
  •     One Child - earnings and AGI must be less than $36,920 or $42,130 if married filing jointly.
  •     Two Children - earnings and AGI must be less than $41,952 or $47,162 if married filing jointly.
  •     Three or More Children - earnings and AGI must be less than $45,060 or $50,270 if married filing jointly.
 *Investment income may not exceed $3,200.
 *Cannot be claimed when filing status is Married Filing Separately.

Credit for Hiring Unemployed Vets
Mileage Deduction Rates
Convert Non Deductible IRA to Roth IRA Tax Free
Credit For Energy Efficient Home Improvements
New and Improved Education Credit
0% Capital Gains Tax Rate Extended
Temporary Reduction to Social Security Tax
Section 179 Depreciation and Bonus Depreciation
Foreclosure Relief
Capital Gain Exclusion on Vacation or Rental Property Conversions
Deduction for Private Mortgage Insurance
$5,000 Subtraction for Certain Retirement Benefits
New Marginal Tax Bracket for High Incomers
Capital Gains Exclusion Reduced
FUTA Credit Reduction to Cost Wisconsin Employers
Health Savings Account Contributions No Longer Taxable
New Subtraction for Child and Dependent Care Expenses
Wisconsin Treatment of Health Insurance Benefits for Adult Children


Credit for Hiring Unemployed Vets: A tax credit will be available to businesses that hire unemployed veterans who begin employment after November 21st, 2011 and before January 1st, 2013. The credit will be 40% of the first $14,000 of pay for vets that have been jobless for at least six months.  Alternatively, employers may be eligible for a 40% credit on the first $6,000 of wages for vets who've been out of work at least four weeks but less than six months.  Larger credits will be available for disabled vets.
Mileage Deduction Rates:  
Business Miles 55.5 cents per mile
Charitable Contribution: 14.0 cents per mile
Medical Travel & Moving 23.0 cents per mile
Convert Non Deductible IRA to Roth IRA Tax Free:  Are you barred from contributing to a Roth IRA because your income is too high?  There is another way to join the Roth party.  You could make a Non Deductible IRA contribution and immediately convert to a Roth IRA, tax free,  If however you have any other Traditional IRA's, SEP's, or Simple IRA's, only a portion of the conversion will be tax free.  Please call our office for additional information concerning this tax strategy.
Credit for Energy Efficient Home Improvements:  The energy credits available in 2011 have been retroactively reinstated for 2012 and will also be available for 2013. The maximum lifetime credit is $500 ($200 for windows and doors).  If you've already claimed energy credits of $500 or more since 2006, no additional credits will be available. Please click here for additional information on qualifying property and credit limitations.  *to be updated*
New and Improved Education Credit: The American Opportunity Tax Credit is available through 2017.  This credit is a modified Hope Credit. The maximum credit will be $2,500, of which up to 40% may be refundable.  This credit can be claimed for students in their first four years of higher education.  The income phase out limits for this new credit are significantly higher than under the old credit, making it available to higher income taxpayers.
0% Capital Gains Rate Extended: Taxpayers who are below the 25% tax bracket will qualify for a 0% tax rate on qualified dividends and long term capital gains.  If such dividends and gains push the taxpayer's income into the 25% marginal bracket, then only amounts in excess will be taxed at a 15% rate.
Temporary Reduction to Social Security Tax: The social security tax that is deducted from an employee's paycheck continues at the reduced rate of 4.2% (normally 6.2%).  For an individual earning $50,000 in taxable W-2 wages, this translates to a tax savings of $1,000.  This reduction is set to expire at the end of 2012.  The chance that Congress extends this tax break is slim to none, so plan accordingly.
Section 179 Depreciation and Bonus Depreciation:  The maximum Section 179 deduction for 2012 and 2013 will remain at $500,000.  The total amount of qualifying property purchased in the year cannot exceed $2,000,000, or the deduction will be phased out dollar for dollar for amounts exceeding $2,000,000.  As always, both used and new equipment can qualify for this deduction. The Bonus Depreciation rate for 2012 is 50%.  Bonus Depreciation applies to the purchase of new qualifying assets only.  Most assets with useful lives of 20 years or less will qualify for Bonus Depreciation.
Foreclosure Relief:  For tax years 2007 - 2013, up to $2 million of debt forgiven on the foreclosure one's primary residence is eligible to be excluded from taxable income.  The debt forgiven that is excluded from income will reduce the taxpayer's basis in the property.  This could result in a capital gain if the Section 121 exclusion limits are exceeded ($250,000 for single filers and $500,000 for married filing joint).
Capital Gain Exclusion On Vacation and Rental Property Conversions:  Under current tax laws, when a vacation or rental property is converted to a principal residence and later sold, a portion of the gain on sale may be subject to tax even if the taxpayer would otherwise qualify under the Section 121 Exclusion.  The amount subject to tax is based on the fraction of time after 2008 that the property was used as a vacation or rental property over the total time the property has been owned by the taxpayer.  For example, assume a taxpayer purchased a vacation home in the year 2001, converted the property to a principal residence in 2011, and sold the property in 2015.  The percentage of gain subject to tax will be 13.3% (2/15).   Under previous law, a taxpayer would have qualified for the full Section 121 Exclusion as long as he/she lived in the property for 2 of the last 5 years.
Deduction For Private Mortgage Insurance (PMI):  The itemized deduction for PMI has been extended through 2013.


$5,000 Subtraction for Certain Retirement Benefits:  Beginning in tax year 2009, up to $5,000 of retirement benefits from a qualified retirement plan or IRA may be subtracted when determining Wisconsin taxable income.  To qualify for the subtraction, the following income limitations must be met:

-if your filing status is single, your federal adjusted gross income must be less than $15,000
-if your filing status is married joint, your federal adjusted gross income must be less than $30,000
-if your filing status is married filing separately, your combined adjusted gross incomes must be less than $30,000

New Marginal Tax Bracket for High Incomers:  Effective January 1st, 2009, high incomers will be subject to a new marginal tax rate of 7.75%.  Previously, the highest marginal rate was 6.75%.
Capital Gains Exclusion Reduced:  Effective January 1st, 2009, the new capital gains exclusion percentage will be 30%.  Previously, 60% of your qualifying capital gains could be excluded from your Wisconsin taxable income.
FUTA Credit Reduction to Cost Wisconsin Employers: Wisconsin employers will be subject to a reduced FUTA credit once again for 2012 payrolls.  In prior years, Wisconsin has borrowed funds from the federal government to pay unemployment benefits.  Under federal law, if a state defaults on its repayment of the loan, the FUTA credit is reduced by .3% for each year the loan is in default. Since 2012 is the second year Wisconsin has failed to repay its loans, the employer paid effective FUTA tax rate will increase to 1.2%.  This is double the effective tax rate that's paid by employers in most other states.  To add insult to injury, Wisconsin employer's are also being forced to cover the interest accruing on these loans.  The Department of Workforce Development will bill this "tax" once per year to most Wisconsin employers.
Health Savings Account Contributions No Longer Taxable: Effective January 1st, 2011, Health Savings Account contributions are no longer subject to Wisconsin income tax.  In past years contributions that were deductible for federal income tax purposes were required to be added back to Wisconsin taxable income on Schedule I.
New Subtraction for Child and Dependent Care Expenses: Beginning in 2011, Wisconsin will allow for a subtraction of dependent care expenses. The subtraction available in 2011 will be limited to $750 for one qualifying person and $1,500 for more than one qualifying person. The allowable subtraction will increase each year. In 2014 the subtraction will be fully phased in; $3,000 for one qualifying person and $6,000 if more than one.
Wisconsin Treatment of Health Insurance Benefits for Adult Children: Wisconsin has adopted the federal tax treatment relating to health insurance benefits for adult children under age 27. Thus, if the child is age 26 or less at the end of the tax year, the health insurance benefits may be excluded from the parent's income even if the child provides more than one-half of his or her own support, earns more income than the exemption amount, does not live with the parent, or if any other restriction applies which prevents the parent from claiming a dependency exemption.  Although this legislation was signed November 4th, 2011, it will be retroactive to January 1st, 2011.



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