Now that we’ve successfully climbed back up the “fiscal cliff” that has garnered so much media attention lately, what does it all mean in terms of 2012 taxes? [Insert drum roll please….] The short answer is “not much”. After it was all said and done, the rules for 2012 tax returns remain pretty much unchanged from last year. However, one change that will impact everyone is the reversion of the Social Security portion of payroll taxes returning to 6.2% from the previous 4.2% effective January 1, 2013. Although most people will not be affected, the “cliff deal” does also set in motion some tax increases for certain individuals once they cross the $ 250,000 threshold beginning in 2013. 
So what do you need to know for 2012 tax returns due in April?
Buyer Beware – New Tax Preparer Regulations are in Town!
Is your tax preparer registered with the IRS? Effective January 1, 2013, ALL paid individual income tax preparers must be registered with the IRS in order to be in compliance with recently enacted tax laws aimed at protecting the integrity of tax preparation. Unregistered tax preparers will be unable to e-file your returns. Therefore, check in with your tax preparer early in the season to make sure they are compliant! Also, always make sure your tax preparer signs his or her name on your return.
2012 Increased Exemption Amount ($ 100)
The amount you can deduct for each exemption has increased by $ 100 to $ 3,800.
2012 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 and is a refundable tax credit in many cases.
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.
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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.
