Thursday, October 20, 2011
THIS JUST IN
The IRS has announced the new, inflation adjusted figures for 2012.
By law, the dollar amounts for a variety of tax provisions, affecting virtually every taxpayer, must be revised each year to keep pace with inflation. New dollar amounts affecting 2012 returns, filed by most taxpayers in early 2013, include the following:
· The personal exemption is $3,800, up $100 from 2011.
· 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 Head of Household, up $200. The additional standard deduction for blind people and senior citizens remains $1,150 for married individuals and $1,450 for Single and Head of Household.
· The maximum employee contribution for 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is increased from $16,500 to $17,000. The catch-up contribution limit for those aged 50 and over remains unchanged at $5,500.
· The IRA deduction for taxpayers covered by an employer retirement plan is phased out for Single and Head of Household with Modified Adjusted Gross Incomes (MAGI) between $58,000 and $68,000, up from $56,000 and $66,000 in 2011, and $92,000 to $112,000, up from $90,000 to $110,000, for married couples filing jointly. The deduction for an IRA contributor who is not covered by an employer plan and is married to someone who is covered is phased out if the couple’s MAGI is between $173,000 and $183,000, up from $169,000 and $179,000.
· The AGI phase-out range for taxpayers making contributions to a Roth IRA is $173,000 to $183,000 for married couples filing jointly, up from $169,000 to $179,000 in 2011. For singles and heads of household, the income phase-out range is $110,000 to $125,000, up from $107,000 to $122,000. For a married individual filing a separate return who is covered by a retirement plan at work, the phase-out range remains $0 to $10,000.
· The AGI limit for the Retirement Savings Contribution Credit (aka saver’s credit) is $57,500 for married couples filing jointly, up from $56,500 in 2011; $43,125 for Head of Household, up from $42,375; and $28,750 for married individuals filing separately and for singles, up from $28,250.
· The maximum foreign earned income deduction rises to $95,100, up $2,200 from 2011.
· The MAGI threshold at which the Lifetime Learning Credit begins to phase out is $104,000 for joint filers, up from $102,000, and $52,000 for Single and Heads of Household, up from $51,000.
· The $2,500 maximum deduction for interest paid on student loans begins to phase out for a married taxpayers filing a joint returns at $125,000 and phases out completely at $155,000, an increase of $5,000 from 2011. The phase out ranges remain at the 2011 levels for Single filers.
· For an estate of a decedent going to his/her final audit during calendar year 2012 the exclusion from estate tax is $5,120,000, up from $5,000,000 for calendar year 2011.
· The annual exclusion for gifts remains at $13,000.