• President Obama to propose extension of Bush income tax cuts for all filers except singles with incomes over $200,000 and married couples with incomes above $250,000.
   
• The 36% and 39.6% tax brackets would be reviewed in 2013 along with the limitation on itemized deductions for upper income taxpayers and personal exemption phase out.
   
• Capital gains would return to 20% in 2013 for these high income filers, dividends would be taxed as ordinary income.
   
• President Obama is trying to paint Republicans into a corner on taxes. He thinks he can score political points by emphasizing that higher-incomers should pay more tax.
   
• A reminder to employees about taking business expenses on Schedule A. Any expenses that an employer would have reimbursed are not Form 2106 deductible.

 

The Service is expanding its audit guide for cash intensive businesses. The handbook also contains chapters on other businesses. bail bondsmen, beauty shops, scrap metal firms, car washes, arcades, mini-marts and laundromats.

Reminder to preparers of returns claiming the earned income tax credit: The due diligence checklist has to be submitted with the filed return, beginning with returns filed in 2012. Before, preparers had to complete Form 8867.