1. The Fiscal Cliff and American Taxpayer Relief Act of 2012 Name and company

2. About the PICPA PICPA – Pennsylvania Institute of Certified Public Accountants The PICPA is a professional association of more than 20,000 members working together to improve the profession and serve the public interest.

3. What Is the Fiscal Cliff? “Fiscal cliff” is a phrase coined by Federal Reserve Chairman Ben Bernanke. The term summarized the possible impact of large tax increases and spending cuts facing the U.S. at the end of 2012.

4. The American Taxpayer Relief Act of 2012 Signed into law Jan. 2, 2013 Addresses the tax issues of the fiscal cliff

5. Expiring Tax Breaks A series of tax breaks were scheduled to expire, including: American Opportunity tax credit “Payroll Tax Holiday” Alternative Minimum Tax patch And more

6. Expiring Tax Breaks Some were extended through 2013 Some were extended for five years Some were permanently extended

7. Expiring Tax Breaks As a result of the Act: American Opportunity tax credit – The American Opportunity college tuition tax credit was extended through 2017.

8. Expiring Tax Breaks As a result of the Act: “Payroll Tax Holiday” – The 2 percent cut in Social Security tax was not extended. All wage earners will see a rise in their withholding beginning Jan. 1, 2013.

9. Expiring Tax Breaks As a result of the Act: AMT patch – A permanent Alternative Minimum Tax patch was passed, including indexing for future adjustments.

10. More Tax Information As a result of the Act: Individual income tax rates stay the same, with an added tax bracket of 39.6 percent for high- income earners ($400,000 or $450,000-joint). Estate tax rate has gone up from 35 percent to 40 percent for estates over an inflation-indexed $5 million ($10 million for couples).

11. More Tax Information As a result of the Act: Personal Exemptions and Itemized Deductions – Previous limitations reinstated for 2013. Phaseout increased to $250,000 ($300,000 - joint). Capital Gains and Dividends – Provisions were extended. Qualified dividends to be taxed at long-term capital gains tax rate; new rate of 20 percent applies to taxpayers in the 39.6 percent tax bracket.

12. Spending Cuts The large spending cuts set to begin in 2013 were postponed for two months. Defense/government contracts - Delayed Other budget cuts – Delayed Medicare payments – Extended for 1 year Unemployment Compensation – Extended through 2013

13. Take Action Tax planning is a year-round undertaking. Consider how potential tax increases and/or spending cuts may effect you. Let the members of Congress know your position on these important issues.

14. Take Action The American Institute of Certified Public Accountants has more resources: – Total Tax Calculator www.totaltaxinsights.org www.totaltaxinsights.org – What’s at Stake www.aicpa.org/WhatsAtStake www.aicpa.org/WhatsAtStake

15. Planning Resources Visit www.ineedacpa.orgwww.ineedacpa.org Ask a CPA CPA Locator