Written by Dick Pryor on Tuesday January 10, 2012
Now that the year 2011 has come and gone (and hopefully you completed your tax planning for the year), it's just about time to start thinking about getting our taxes in order for 2012. And with the New Year comes some changes and proposed changes in the tax code and tax policy. So, we launch 2012 on Oklahoma Forum with a discussion of just that with our guests: Mickey Hepner, Dean of the College of Business Administration at the University of Central Oklahoma; David Greenwell, CPA with Cole & Reed, P.C. in Oklahoma City; and Micah Steelman, CPA with Peters & Chandler P.C. in Oklahoma City.
There are a few changes to be aware of as you begin your tax preparation. Among them:
- The non-business energy property tax credit has been reduced from 30% to 10%
- Changes have been made in the reporting for Roth IRA's
- The alternative minimum tax exemption has increased
- Mileage rates increased last year for the first six months to $0.51 per mile and in the second six-month period it increased to $0.55 per mile.
- There has been a change in the self-employed health insurance deduction.
Also, it is worthwhile to know that the date for filing income taxes is not April 15 this year, but April 17. Obviously, it is a good idea to talk about the various changes with your tax preparer.
Our discussion centered not so much on what is new this year, but what might happen during the course of 2012. Chief among those is the possible further reduction in the state income tax rate (currently at 5.25%) and the possibility that the state income tax could be completely phased-out over time. One legislative task force, in fact, has made that recommendation, and has also recommended changes or repeal of more than three dozen tax credits and incentives.
Our guest, Mickey Hepner, was one of the economists who testified before the task force, and he makes a forceful argument that this is not the time to cut the state income tax rate. There is momentum, however, to do that. If the income tax is cut, the task force believes that the revenue lost will be made up through the elimination of tax credits. David Greenwell crunched those numbers to determine the overall effect of the cuts and he came to some interesting conclusions. His broad finding is that even if the state income tax is cut, the repeal of various tax credits will result in a net increase in taxes for all but the wealthiest taxpayers. A family of four making about $50,000 per year, for instance, would pay an additional $100 per year in taxes, according to Greenwell.
So, it's an enlightening discussion about one of those topics many people would rather avoid, but which will be a big story in the election year of 2012.
Thanks for watching.
Until next time,
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