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The Fiscal Cliff Tax Changes

Published on February 8, 2013 by Staff Writer

accounting, fiscal cliffIt’s been just over one month since congress passed late night legislation to partially resolve the fiscal cliff crisis. As the dust settles, what does this resolution mean to you, your family and your bottom line? What changes are coming and what remains to be resolved?

Businesses would be wise to snatch up any potential employees who hold a degree in accounting from Broadview University as tax compliance rules are going to get more complicated in the next several years even with this historic resolution.

The More Things Change…

The more they stay the same. The fiscal cliff resolution addressed the immediate deadline regarding the tax aspects of the crisis. The dual issues of the debt ceiling and sequestration were left to be “resolved” another day.

While the legislation does work to prevent significant tax increases and addresses some spending issues it does not fully address the underlying issues in our country’s fiscal policies. The fiscal cliff solution does have some significant changes to the tax laws that will affect your bottom line in 2013. Here’s a quick overview:

There are also other specific areas of the tax code that were addressed such as estate and gift taxes, education and family tax credits. Certain provisions accounting, taxeswere also extended. The deduction for business equipment investment, for example, was extended through 2013.

This resolution is only the first round in the ongoing battle to get the country’s fiscal house in order. With negotiations over the debt ceiling and sequestration still to come, it’s going to be an interesting spring and summer in Washington. For now, many taxpayers have been spared huge increases in annual taxes, but there will be incremental tax raises that will take a bite out of most taxpayer’s paychecks.

The real test for those holding a degree in accounting will come in the next two years as the Affordable Care Act (Obamacare) slowly comes online. The fiscal cliff resolution is a decent step in the right direction, but more work needs to be done to address spending and further refine the tax code. Let’s hope both parties in Washington can begin to work together to get it done!

 

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