Probate & Trust Law Section Conference Manual ... - Minnesota CLE

qualifying charities. Distributions are eligible for the exclusion only if made on
or after the date the IRA owner attains age 70½.
iv. Deduction for Mortgage Premium Insurance. The amount paid (or accrued) for
qualified mortgage insurance has been extended for those payments or
amounts accrued by 12/31/13. Deduction is phased out for taxpayers with AGI
over $100,000 ($50,000 for married filing separate).
v. Discharge of Principal Residence Indebtedness. A maximum exclusion from
gross income of $2,000,000 is provided for any discharge of indebtedness
income by reason of a discharge (in whole or part) of qualified principal
residence indebtedness. In general, the discharge indebtedness eligible for the
exclusion must be indebtedness incurred in the acquisition, construction, or
substantial improvement of the principal residence of the individual and
secured by the residence. This has been extended by ATRA through the end of
2013.
vi. Education IRA (Coverdell Education Saving Accounts). Education IRAs were
scheduled to lapse at the end of 2012, but now has been made permanent by
ATRA:
Increased annual contribution limit to $2,000
Expanded the definition of qualified education expenses to include
qualified elementary school and secondary school expenses
Increased phase out range to twice that of the range enjoyed by single
taxpayers
Allowed contributions to an account on behalf of a special-needs
beneficiary regardless of whether that beneficiary has reached the age
of 18
vii. Student Loan Interest Deduction. Certain individuals may claim an above-theline
deduction for interest paid on qualified education loans. ATRA increased
the phase out ranges for eligibility from $50,000 to $65,000 for single taxpayers
and to $100,000 to $130,000 for married filing joint returns. Additionally, the
law removed the restrictions that: (i) disallowed the deduction with respect to
interest paid on a qualified education loan after the first 60 months in which
interest payments are required; and (ii) disallowed the deduction with respect
to voluntary payments of interest. These liberalizations are permanent.
viii. Employer-provided Education Assistance. Certain employer-paid educational
expenses are excluded from gross income and wages of an employee if provided
under a Section 127 educational assistance program. Graduate education is
considered qualifying education. This has been made permanent under ATRA.
ix. Dependent Care Credit. A taxpayer who maintains a household that includes
one or more qualifying individuals may claim a nonrefundable credit for a
limited amount of employment-related expenses. Qualifying individuals are
generally dependents under the age of 13 or a dependent (or spouse) of the
taxpayer who is physically or mentally incapable of caring for himself or herself.
The provision increased the maximum amount of eligible employment-related
expenses from $2,400 to $3,000 if there is one qualifying individual and from
$4,800 to $6,000 if there are two or more qualifying individuals. The provision
also increased the maximum credit from 30 to 35 percent of eligible
employment-related expenses. Finally, the provision modifies the phase down
of the credit, such that the 35% credit rate is reduced, but not below 20%, by