What You Need To Know About 2012 Tax Changes
Updated Tax Items Announced for 2012
Last Thursday the IRS released its annual revenue procedure including adjustments to income tax tables, tax credits, bonuses and loopholes for items affecting the 2012 tax changes.
In addition, the 2012 contribution limits and other figures for pension plans and retirement-related items were announced by the IRS.
Aside from the adjustments made for inflation on the income tax tables, the new revenue procedure updated amounts for things such as the personal exemption (up to $3,800 from $3,700) and the standard deduction. Other items including the child tax credit, American opportunity and Lifetime Learning Credits, earned income credit and gift tax exclusions were announced as well.
Lastly, the Social Security Administration announced the Social Security wage base in 2012 will be $110,100 (from $106,800 previously).
2012 Tax Changes include:
The maximum earned income tax credit will increase to $5,891 from $5,751
The IRS also announced an increase in the contribution limit for certain retirement accounts. In 2012, the new limit will be $17,000 per year, up from $16,500 in 2011. This new limit applies to 401(k)s, 403(b)s, the government’s Thrift Savings Plan and some 457 plans.
The new standard deduction is $11,900 for married couples filing a joint return, up $300, $5,950 for singles and married individuals filing separately, up $150, and $8,700 for heads of household, up $200. Nearly two out of three taxpayers take the standard deduction, rather than itemizing deductions, such as mortgage interest, charitable contributions and state and local taxes.
Personal and dependent exemptions will increase by $100 to $3,800
A complete list of all of the 2012 tax changes can be found by visiting the IRS.gov website: In 2012, Many Tax Benefits Increase Due to Inflation Adjustments
2011 Federal Tax Update
With historic tax law changes already enacted, there are a TON of new strategies to discuss with your clients. THIS is the time of year to use the leverage of the New Year’s deadline to work RIGHT NOW on creating a tax plan to take advantage of the breaks.
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