The fiscal cliff was the progeny of 2011’s debt ceiling debate and the Budget Control Act of 2011The Budget Control Act was Congress’s self-imposed ultimatum to find $1.2 trillion in deficit reduction (via a bipartisan super committee) or else.

If Congress had failed to reduce the deficit, two things would have happened on January 1st 2013.  First, Bush-era tax cuts would have been allowed to expire.  Second, massive cuts in government spending would have automatically kicked in.  On New Year’s Day, however, the fiscal cliff ultimatum was legislated from existence with the passage of H.R. 8, American Taxpayer Relief Act of 2012

The Bad News – The Good News

What does the passage of the American Taxpayer Relief Act of 2012 mean for you and your family? The bad news: the national debt, now exceeding $145,000 for each taxpayer, will continue to grow – at least until the next, quickly approaching debt ceiling debate.  The good news: most tax-paying Americans will continue to enjoy many of the deductions, exemptions, credits, and tax rates they have in recent years.  Today, I’ll summarize some of the major provisions that will impact your personal income tax liability.

We’ll dive deeper into the American Taxpayer Relief Act of 2012 and its impact on businesses in the future.  In the mean time, please remember that this article (or any article) should not be relied upon to make tax or financial decisions.  If you have questions regarding the American Taxpayer Relief Act of 2012 or need assistance with any tax issue, please feel free to contact our office and (304) 267-2594.

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