United States Tax Update for 2012
The American Taxpayer Relief Act of 2012, passed by Congress on Jan. 2 2013, extends or modifies tax provisions that expired at the end of 2011 and 2012.
At the time of this writing (Jan. 21 2013), due to the late passage of the American Taxpayer Relief Act, the IRS has yet to release its annual summary of "What's New" for the coming filing season. In particular, the 2012 version of its flagship Publication 17 ‐ Your Federal Income Tax isn't yet available. The full text of the Act is quite long, but a summary of provisions can be found on Wikipedia, along with links to various analysis and reaction.
Certain tax benefits increased in 2012 due to the normal inflation adjustments. Personal exemptions and standard deductions rose, tax brackets widened, and the dollar amounts for a variety of tax provisions were revised. The new dollar amounts are available here.
Foreign Account Tax Compliance Act (FATCA)
Under FATCA, a requirement came into effect last year for certain taxpayers with specified foreign financial assets to file Form 8938 with their returns. FATCA will soon require foreign financial institutions (e.g. Canadian banks) to begin reporting directly to the IRS information about accounts held by U.S. taxpayers. Foreign financial institutions will be required to enter into a special agreement with the IRS by June 30 2013.
However, the Globe and Mail reported on Jan. 7 2013 that FATCA may violate the Canadian Charter of Rights and Freedoms, and that the U.S. and Canada may be negotiating an agreement in secret to allow Canadian banks to report to CRA, rather than the IRS.
New Compliance Procedures for Non-Resident U.S. Taxpayers
The IRS announced that, beginning Sept. 1 2012, taxpayers living outside the United States who haven't been filing their U.S. tax returns can take advantage of new procedures and file tax returns for the past three years only (formerly six years), along with FBARs for the past six years. The IRS will not assert penalties or pursue follow-up actions for taxpayers presenting "low compliance risk."