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Happy New Year from IWLA and How the Fiscal Cliff Deal Effects Teachers

05 Jan 2013 1:57 PM | Tracy Dinesen

Happy New Year from IWLA! We hope that 2013 proves to be a positive year for us all. As president, I would like to take this opportunity to introduce you to some changes that are happening here on the webpage. We will be posting items of interest here on the blog, items that we are working on as a board, items of interest in world language education and items of interest to you as a teacher. We have many projects underway and we look forward to sharing them with you.  There will be two or three posts every week so we hope that you not only enjoy reading them, but that you also comment and share your thoughts.

Our first post is from Jason T. Dinesen, E.A. Jason is an enrolled agent who specializes in taxes. Welcome Jason and thank you for letting us know what changes we will see as a part of the fiscal cliff deal made last week in Congress. Thank you for letting us know what teachers can expect this year!

Congress passed a “fiscal cliff” bill on January 1. Here are some of the key provisions of interest to educators:

$250 “Above the Line” Deduction for Classroom Expenses
The bill extends, through December 31, 2013, the deduction for classroom expenses of K-12 teachers and teacher’s assistants. This deduction can be taken even if an educator claims the standard deduction.

Tuition and Fees Deduction
The deduction of up to $4,000 of qualifying tuition and fees for college expenses has been extended through December 31, 2013.

Student Loan Interest Deduction
The allowance of a deduction of up to $2,500 of student loan interest has finally been made a permanent part of the tax code.

American Opportunity Credit
The American Opportunity Credit (formerly known as the HOPE Credit) has been extended through 2017. This credit is available to students in their first 4 years of undergraduate studies.

Employer-Provided Educational Assistance
The bill makes permanent the ability of your employer to pay up to $5,250 of tuition, tax-free, on your behalf (for example, if you are pursuing a masters degree and your employer helps pay your tuition).

Other Things to Know About the Fiscal Cliff Bill
Here are some general-purpose items about the fiscal cliff bill of interest to anyone:

  • The “Bush Tax Cuts” are made permanent, except for a new tax bracket of 39.6% created for taxpayers with income above $400,000 (if single) or $450,000 (if married). The top rate under the Bush Tax Cuts had been 35%.
  • The capital gains rate of 0% for people in the 10% and 15% tax brackets has been made a permanent part of the tax code. The capital gains rate of 15% for people in the 25%-35% tax brackets has also been made permanent. A new capital gains rate of 20% has been created, but will only apply to people in the 39.6% bracket.
  • The child tax credit is permanently set at $1,000 per child (it had been set to drop to $500/child in 2013).
  • The credits available for adoptions and for daycare expenses have been made permanent.
  • The Earned Income Credit remains expanded through 2017, allowing more taxpayers to qualify for this credit.

Jason T. Dinesen, EA
Dinesen Tax, Inc.
Twitter: @dinesentax
Phone: 515-778-8189

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