Look over these important changes to the tax code before you file your 2012 taxes
Every year the IRS tweaks the tax code at least a little bit: introducing new credits and deductions, discontinuing temporary provisions of the tax code, and adjusting various numbers for inflation.
Some years, depending on what happens in Congress, there are really big changes that end up affecting everyone pretty dramatically. But for the 2012 tax year the changes were relatively small. Still, you should be aware of them before you go gallivanting off into the tax preparation sunset.
Here, without further ado, are the tax changes for the 2012 year:
- Income limits for excluding education savings bond interest increased – Your modified adjusted gross income (MAGI) must be less than $87,850 if you’re a single filer or less than $139,250 if you’re married filing jointly or a qualifying widow(er) in order to exclude education savings bond interest.
- Foreign earned income exclusion – The maximum exclusion is now $95,100.
- Standard mileage rates – The deductible costs of using your automobile for business have increased to 55.5 cents/mile and for getting medical care or moving to 23 cents/mile. The rate for charitable use has remained the same at 14 cents/mile.
- Personal exemption increased – The personal exemption is now $3,800.
- Standard deduction increased - The standard deduction is now $5,950 for single filers and $11,900 for married filing jointly.
- Alternative minimum tax (AMT) exemption amount permanently adjusted for inflation - The new AMT exemption amounts are $50,600 if single, $78,750 if married filing jointly or a qualifying widow(er), and $39,375 if married filing separately.
- Lifetime learning credit income limits decreased – Your modified adjusted gross income must be less than $52,000 if single or $104,000 if married filing jointly in order to claim the lifetime learning credit.
- Retirement savings contribution credit income limits increased – Your modified adjusted gross income (MAGI) must be less than $28,750 if single, $57,500 if married filing jointly, and $43,125 if head of household in order to claim the retirement savings contribution credit.
- Adoption credit or exclusion – The maximum amount of the adoption credit you can receive, or the maximum amount of employer-provided adoption benefits that you can exclude, has decreased to $12,650. Note that your modified adjusted gross income (MAGI) must be less than $229,710 in order to take advantage of it.
- Adoption credit no longer refundable – The adoption credit is no longer refundable starting in 2012.
- Earned Income Credit (EIC)- The income thresholds for claiming the EIC have changed slightly for 2012.
- If three or more children lived with you, single filers must earn less than $45,060 and married couples filing jointly less than $50,270.
- If two children lived with you, single filers must earn less than $41,592 and married couples filing jointly less than $47,162.
- If one child lived with you, single filers must earn less than $36,920 and married couples filing jointly less than $42,130.
- If a child did not live with you, single filers must earn less than $13,980 and married couples filing jointly less than $19,190.
- Also note that you cannot have more than $3,200 in investment income and still claim the credit.
Now you’re ready to file your 2012 taxes!
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Tags: IRS
This entry was posted on Friday, December 21st, 2012 at 5:50 pm and is filed under Tax News.
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Hi, can i continue to claim my 16 yr old daughter even if she is working? If so up to how much is she allowed to make before she must file her own return?
Hi Paty,
Yes, you can still claim your 16 daughter as a dependent, even if she is working. Remember though, she must meet all of the following requirements:
If she’s really making a ton of money, that last one could potentially prevent you from claiming her.
As for filing a return, she as to file if she has more than $950 in unearned income or more than $5,950 in earned income.
What exactly is the alternative minimum tax credit n how do i know if i qualify
we have been pagoing for braces for my husband’s older daughter so center January 2012 each month she does not live with us and we were wondering if we can claim that or not? and we r doing a total remodel on our house cause it was sinking really bad so we had to move into our camper next to the house. we have put 3000 into it so far can we claim any of it?
Hi James,
The refundable AMT credit was enacted to give relief to individuals who exercised incentive stock options that lost all or a significant portion of their value in later years. For more info, please refer to this form: http://www.1040.com/pdf/1040/federal/2012/FD-Form%208801-Instructions%20for%20Form%208801,%20Credit%20for%20Prior%20Year%20Minimum%20Tax%20-%20Individuals,%20Estates,%20and%20Trusts.pdf
Hi Marion,
You can find information about deducting the cost of the braces here, but only if the girl was your dependent: http://www.irs.gov/pub/irs-pdf/p502.pdf. You might be able to deduct your sinking house as a casualty loss. You can find more information here: http://www.irs.gov/pub/irs-pdf/p547.pdf
I didn’t file my 1098 for 2011, is it too late to file it for 2012?…. And will I be penalize by the IRS for not filing on time?
Hi Lisa,
Did you file a return for 2011? If not, you should probably do that now. If you did file a 2011 return but forgot to include your 1098, then you will have to file an amended return for 2011. You can’t just tack a 1098 from 2011 onto your 2012 return.
As for penalties from the IRS, it’s impossible for me to say. If it turns out that you owe money, then yes, you will probably have to pay penalties and interest, but if it turns out you are due a refund then you won’t owe any penalties.
Can i claim my mother although she is receiving Social Security?
Hi Gladys,
You can claim your mother as a qualifying relative (which is a different type of dependent from a qualifying child) provided that she meets the following requirements:
For more information please refer to this post on our sister site PriorTax: http://www.priortax.com/filing-late-taxes/who-qualifies-as-a-dependent-on-your-taxes/
If i didn’t get to file for the adoption credit last yr and they stop refunding it this yr can i still get refunded for last yrs credit? if so what do i need to do to get that refund?
Hi Tonia,
Yes, you can still get a refund for the credit. In order to get it you will need to amend your 2011 return (or if you didn’t file one, then file a 2011 return).
Hi, I’m doing my dad’s taxes and he and my mom file separtely (neither divorced nor legally separated but haven’t lived togoether in 20 yeras). I know my mom itemizes her taxes. If I read the rules right, he has to check line 39B which means he gets ZERO standard deduction which now increases the amount tax he owes by $1500!! He’s retired and on a pension. Is there no expeption to this new rule?
Hi Tara,
Unfortunately, married filing separately taxpayers must BOTH claim the standard deduction or BOTH itemize their deductions. So if your mother itemizes, then your father must also itemize. In this case he would not get the standard deduction, and if he were not able to claim very many itemized deductions this would certainly increase his tax bill significantly. Unless your mother derives a much larger tax benefit from itemizing her taxes, the most mutually beneficial option would probably be to have them both claim the standard deduction. It would be difficult to convince your mother to do this if she has to forgo a lot of money though.