IRS TAX CODE CHANGES FOR 2012
Personal and dependent exemptions have increased by $100 to $3,800.
The maximum earned income tax credit has increased to $5,891 from $5,751.
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.
The foreign earned income deduction rises to $95,100, for an increase of $2,200.
The income 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 singles and heads of household, up from $51,000.
The $2,500 maximum deduction for interest paid on student loans begins to phase out for married taxpayers filing a joint return at $125,000 and phases out completely at $155,000, an increase of $5,000. For single taxpayers, the phase out ranges remain at the 2011 levels.
For an estate of any decedent dying during calendar year 2012, the basic exclusion from estate tax amount is $5,120,000, up from $5,000,000.
The annual exclusion for gifts remains at $13,000.
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Disclaimer: Tax advice contained herein was not written to be used and cannot be used to avoid payment of taxes or to avoid penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions. All information provided is for illustrative purposes only. You should contact an accountant, tax preparer or tax attorney for advice or information specific to your situation. This information is not to be used as a directive.
HOT TIP: The Gaff on Moody St. in Waltham, MA is everything a neighborhood pub should be! They have an extensive beer selection and pub food you would come back for. Try the roasted turkey breast Reuben which is made with delicious, moist chunks of real roasted turkey. Wash it down with my favorite - Kentucky Bourbon Ale!
Strange But True
In 2005, Tennssee passed a law requiring people who purchased illegal substances in the state to pay an excise tax!
The "crack" tax, as it was known, applied to controlled substances like cocaine and meth, as well as "moonshine".
No identification was required to purchase tax stamps from the Dept of Revenue knowing that doing so could not be used against the person in criminal court.
In 2006 the tax was declared unconstitutional.
