All year long we kept reminding our clients and friends that the Section 179 deduction, the income tax election to expense certain assets rather than to depreciate their cost over several years, was limited to $139,000 for 2012. That was the law in 2012 and this limit was less than the generous 2011 limit of $500,000.
On January 2, 2012, the American Taxpayer Relief Act of 2012 was passed that included a provision to retroactively raise the 2012 limit back to $500,000. Since it changed the limit available in 2012 on January 2, 2013, most businesses were unable to take advantage of the higher limit in their 2012 tax planning efforts. That’s the bad news.
The good news is the provision that expired on December 31, 2011 was extended for 2012 and 2013. So, a quick summary of the Section 179 rules for 2013 is as follows.
YOU MUST ACT BEFORE FEBRUARY 1, 2013 – CHARITABLE DONATIONS FROM YOUR IRA
The American Taxpayer Relief Act of 2012 extended a “taxpayer friendly” provision for 2012 and 2013 which provides for a “qualified charitable distribution” from a taxpayer’s Individual Retirement Account (IRA). This provision, which had “sunset” at the end of 2011, was widely expected not to be renewed.
A “qualified charitable distribution” (QCD) is an otherwise taxable distribution from an IRA (other than an ongoing SEP or SIMPLE IRA) owned by an individual who is age 70 ½ or over that is paid directly from the IRA to a qualified charity. An IRA owner can exclude from gross income up to $100,000 of a qualified charitable distribution made for a year, and the “QCD” can be used to satisfy any required minimum distributions from the IRA for the year. The amount of a QCD excluded from gross income is not taken into account in computing your charitable contributions for the year. In other words, there is not a benefit.
The IRA owner can treat a contribution made to a qualified charity in the month of January 2013 as a 2012 qualified charitable distribution in either of the following circumstances:
As those who occasionally visit the casinos or the racetrack know, the Internal Revenue Service requires that a winner must be given a form W-2G (Certain Gambling Winnings) at the time of each bet with proceeds of $1,200 or more. It surprises no one that the IRS wants to be sure the winnings are reported.
We’ll soon bring you a more complete discussion on documenting your gambling losses, and also explain how losses are treated, but here we want to alert you as to the importance of getting us each and every one of the forms W-2G you receive during the year.