What’s New for 2012 Tax Returns (Due in April 2013)?

1/2/13: Updated for new tax laws enacted as part
of the “Fiscal Cliff” deal

2012 was an average year in terms of changes to the tax law. Below are some changes to federal tax law that are either new, continued from a prior year, or renewed as part of the “fiscal cliff” deal. North Carolina Tax Law Changes

New Tax Preparer Regulations

As of January 1, 2013, all paid individual income tax preparers must be registered with the IRS to be in compliance with new laws recently enacted to protect the integrity of tax compliance.  It is advised that individuals inquire with their tax preparer to make sure they are in compliance with the new laws. See also, Guide to Choosing a Tax Preparer.

Increased Exemption Amount ($100)

The amount you can deduct for each exemption has increased by $100 to $3,800.

Standard Deductions Increase ($150 – $300)

Standard deductions increased between $150 and $300 depending on filing status.  2012 standard deductions are listed below.

Filing Status

Standard Deduction

Additional Deduction if 65 or   Older

Additional Deduction If Blind

Single/Married Filing Separate $5,950 $7,400 Add $1,450
Married Filing Jointly $11,900 $13,050 if one spouse is at least   65, $14,200 if both are at least 65 Add $1,150
Head of Household $8,700 $10,150 Add $1,450

Child Tax Credit ($1,000)

The child tax credit remains $1,000 for each child dependent under the age of 17.

American Opportunity Credit ($2,500)

A credit up to $2,500 per student is available for the first four years of undergraduate education.

Student Loan Interest

Many individuals are able to deduct up to $2,500 in student loan interest paid during the year on qualified student loans.

First-Time Homebuyer Tax Credit Repayment

Certain individuals who participated in the First Time Homebuyer Tax Credit between 2008 and 2010 will need to pay back all or a portion of their tax credit.  See IRS website for more specifics.

Increase in Retirement Plan Contributions ($500)

Most participants in retirement plans such as 401(k) plans, 403(b) plans, and most 457 plans can increase their annual contribution by $500 to $17,000.

Adoption Credit

Decreased from $13,360 in 2011 to a maximum of $12,650 per child in 2012.

Plug-In Electric Vehicles ($2,500 – $7,500)

Plug-in Electric Drive Vehicles placed in service during 2012 may be eligible for a credit ranging from $2,500 to $7,500.

Earned Income Tax Credit (EITC) ($140)

The amount of Earned Income Tax Credit for taxpayers has increased by $140. Filers can claim up to three (3) children and earn higher levels of income before phasing out of the credit.  The maximum credit for three children claimed during 2012 is $5,891

Employer-Provided Education Assistance ($5,250)

Up to $5,250 in employer-provided undergraduate and graduate education costs can be excluded from gross income for 2012 (previously only applicable to undergraduate education).

Educator Expenses

Teachers and educators are allowed to deduct up to $250 of the cost of classroom supplies.

Sales Tax Deduction

Taxpayers have a choice to either deduct state income tax or state sales tax as an itemized deduction.

Tuition and Fees Deduction

Students may be able to deduct up to $4,000 in qualified tuition and fees paid to eligible colleges and universities.

Mortgage Insurance Premiums

Taxpayers are able to deduct mortgage insurance premiums paid on mortgages taken out after 2006 as an itemized deduction.

Deductible Vehicle Mileage

The following rates apply to most vehicles used for the purposes listed below during 2012.

Purpose
Charitable 14 cents
Business 55.5 cents
Medical/Moving 23 cents

Simply Taxes, LLC is a local year-round tax preparation firm with an office located in North Raleigh. Our Raleigh accountants are ready to work one-on-one with you to help maximize your refund opportunities and to provide other tax services in the professional manner you deserve!

The information contained within this article is for general guidance only. As such, it should not be used as a substitute for consulting with professional accounting, tax, legal or other competent advisers.

Related Articles

2012 Federal Income Tax Rates

2012 North Carolina Income Tax Rates

2013 Income Tax Return Due Dates (For 2012 Returns)

Guide for Choosing a Tax Preparer

Standard Deductions vs. Itemized Deductions:  Which Deduction is Better for Tax Returns?

Simply Taxes, LLC is a local year-round tax preparation firm with an office located in North Raleigh. Our Raleigh accountants are ready to work one-on-one with you to help maximize your refund opportunities and to provide other tax services in the professional manner you deserve!

The information contained within this article is for general guidance only. As such, it should not be used as a substitute for consulting with professional accounting, tax, legal or other competent advisers.

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