HR 22. (AICPA Activities).The AICPA AICPA See American Institute of Certified Public Accountants (AICPA). submitted comments to Congress on the Individual and Small Business Tax Simplification Act of 2003 (HR 22). The legislation proposes changes to the following areas: 1. Alternative minimum tax (AMT See vPro. ). 2. Head of household filing status. 3. Taxation of Social Security benefits. 4. Taxation of capital gains. 5. The 2% floor on miscellaneous itemized deductions Itemized Deduction A deduction from a taxpayer's taxable adjusted gross income that is made up of deductions for money spent on certain goods and services throughout the year. . 6. Deduction for home mortgage points. 7. Taxation of minor children. 8. Dependent care credit. 9. Phaseout phase·out n. A gradual discontinuation. of the overall limit on itemized deductions. 10. Phaseout of personal exemptions. 11. Personal holding company tax. 12. Definition of child. 13. Treatment of government benefits in determining support and cost of maintaining a household. 14. Hope and Lifetime Learning Credits Lifetime Learning Credit A federal initiative whereby a person is eligible for a non-refundable credit for a specific amount spent on higher education tuition and fees during the year. Notes: These fees can be for the person, his or her spouse, or his or her dependents. . 15. Definition of qualifying higher education higher education Study beyond the level of secondary education. Institutions of higher education include not only colleges and universities but also professional schools in such fields as law, theology, medicine, business, music, and art. expenses. 16. Passthrough-entity regime. 17. Sec. 179 election. 18. Collapsible corporations. 19. References to general partners. 20. References to limited partners. 21. Partnership income attributable to capital excluded from net earnings from self-employment. 22. Large-partnership reporting rules. In a letter to Rep. Amo Hougton (R-NY), the bill's sponsor, the AICPA noted that HR 22 does an excellent job of focusing on many areas needing simplification. For example, although the AICPA supports outright repeal of the AMT, it concludes that the proposed changes are a reasonable compromise. Accelerating the repeal of the personal exemption phase-outs and the itemized deduction limit, for instance, will make tax planning Tax planning Devising strategies throughout the year in order to minimize tax liability, for example, by choosing a tax filing status that is most beneficial to the taxpayer. easier for individuals and eliminate some of the confusing marginal rates. In addition, simplifying and harmonizing the definition of child will clear up confusion about filing status and dependency exemptions and credits. These changes alone will make the Code more consistent, rational, fair and transparent, particularly for low- and middle-income taxpayers. While the AICPA notes the revenue costs associated with these reforms, it also acknowledges that the reforms would eliminate significant compliance burdens. |
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