What's New for 2012

Standard Deduction.

The following amounts represent the increased amounts of the standard deduction for the various filing statuses for 2012 tax returns.

Single	$5,950
Married Filing Separate	$5,950
Married Filing Jointly and Qualifying Widow(er)	$11,900
Head of Household	$8,700

The following are additional amounts for blind and/or elderly taxpayers. These amounts remain the same in 2012 as they were in 2011.

Single and Head of Household
Blind or Elderly	$,14520
Blind and Elderly	$2,900
Married Filing Jointly or Married Filing Separately, or Qualifying Widow(er)
Blind or Elderly (per taxpayer)	$1,150
Blind and Elderly (per taxpayer)	$2,300

Personal Exemption

The personal exemption amount for 2012 returns is $3,800 per deduction. The deduction phase-outs and reductions for itemized deductions have been eliminated for 2012 returns.

Tax Bracket Thresholds.

Tax bracket thresholds increase for each filing status for 2012. For a married couple filing a joint return, for example, the taxable-income threshold separating the 15-percent from the 25-percent bracket is $70,700 (2012) is up from $69,000 in 2011.

Schedule X - Use if your 2012 filing status is Single
Single Income over	But not over	The tax is	of the amount over
$0	$8,700	10%	$0
$8,700	$35,350	$870.00 + 15%	$8,700
$35,350	$86,650	$4,867.50 + 25%	$35,350
$86,650	$178,650	$17,442.50 + 28%	$86,650
$178,650	$388,350	$43,482.50 + 33%	$178,650
$388,350	---------------	$112,683.50 + 35%	$388,350

Schedule Y-1 - Use if your 2012 filing status is Married Filing Jointly or Qualifying Widow(er)
MFJ or QW Income over	But not over	The tax is	of the amount over
$0	$17,400	10%	$0
$17,400	$70,700	$1,740.00 + 15%	$17,400
$70,700	$142,700	$9,735.00 + 25%	$70,700
$142,700	$217,450	$27,735.00 + 28%	$142,700
$217,450	$388,350	$48,665.00 + 33%	$217,450
$388,350	---------------	$105,062.00 + 35%	$388,350

Schedule Y-2 - Use if your 2012 filing status is Married Filing Separately
MFS Income over	But not over	The tax is	of the amount over
$0	$8,700	10%	$0
$8,700	$35,350	$870.00 + 15%	$8,700
$35,350	$71,350	$4,867.50 + 25%	$35,350
$71,350	$108,275	$13,867.50 + 28%	$71,350
$108,725	$194,175	$22,332.50 + 33%	$108,725
$194,175	---------------	$52,531.00 + 35%	$194,175

Schedule Z - Use if your 2012 filing status is Head of Household
HoH Income over	But not over	The tax is	of the amount over
$0	$12,400	10%	$0
$12,400	$47,350	$1,240.00 + 15%	$12,400
$47,350	$122,300	$6,482.50 + 25%	$47,350
$122,300	$198,050	$25,220.00 + 28%	$122,300
$198,050	$388,350	$46,430.00 + 33%	$198,050
$388,350	---------------	$109,229.00 + 35%	$388,350

Standard Mileage Rates.

The deductible amounts for the use of your car for business purposes is 55.5 cents per mile for 2012.

The deductible amounts for the use of your car for qualified medical or moving expenses is 23 cents per mile for 2012.

The deductible amount for the use of your car for qualified charitable causes remains at 14 cents per mile, the same amount as in the previous several years. The reason is the amount is set by statute and can only be changed by Congressional action and Presidential signature. The other mileage rates are subject to IRS discretion.

Earned lncome Credit.

The following chart includes the maximum income limit and the maximum allowable credit for 2012:

Single Filers	Maximum Credit	Income Limit
No children	$475	$13,980
One Child	$3,169	$36,920
Two Children	$5,269	$41,952
Three Children	$5,891	$45,060

Joint Filers	Maximum Credit	Income Limit
No children	$475	$13,980
One Child	$3,169	$42,130
Two Children	$5,236	$47,162
Three Children	$5,891	$50,270

The maximum investment income you can have and receive the credit is $3,200 for 2012.

Roth IRAS.

If you rolled over or converted part or all of another retirement plan to a Roth IRA in 2010, or made an in-plan a rollover to a Roth account in 2010, and did not elect to include all of the resulting taxable amount in income for 2010, you must report half on your 2011 return and the rest on your 2012 return.

Alternative lncome Tax (AMT).

For 2011 the AMT exemption amount was as follows:

For Single or Head of Household returns	$48,450
For Married Filing Jointly returns	$74,450
For Married Filing Separately returns	$37,225

For 2012 returns, the AMT exemption amounts are decreased as follows:

For Single or Head of Household returns	$33,750
For Married Filing Jointly returns	$45,000
For Married Filing Separately returns	$22,500

Many situations may trigger the AMT. The following is a list of the most common ones.

• Large deductions on Schedule A for taxes (including deductions for state income taxes).
• A larger than average number of dependents.
• Large gross income in relation to taxable income.
• The exercise of incentive stock options.
• Tax exempt interest.
• Long-term capital gains.

Section 179 expense limits.

For 2011, the basic section 179 dollar limit was $500,000. For 2012, the basic limit is sharply reduced to $139,000.

The SUV limit remains at $25,000 for 2012.

The section 179 phase-out for 2011 was $2,000,000. For 2012, the phase-out limit is reduced to $560,000.

Retirement Savings Contribution Limit.

For 2011, the retirement savings contribution limit was as follows:

For Single returns	$28,250
For Married Filing Jointly returns	$56,500
For Head of Household	$42,375

For 2012, the retirement savings contribution limit has been increased as follows:

For Single returns	$28,750
For Married Filing Jointly returns	$57,500
For Head of Household	$43,125

Lifetime Learning Credit lncome Limits.

The income phase-out range for 2011 was as follows:

For Single returns	$51,000 - $61,000
For Married Filing Jointly returns	$102,000 - $122,000
For Head of Household	$51,000 - $61,000

For 2012 returns, the income phase-out range has been increased to the following amounts:

For Single returns	$52,000 - $62,000
For Married Filing Jointly returns	$104,000 - $124,000
For Head of Household	$52,000 - $62,000

The maximum Lifetime learning credit remains at 20% of the first $10,000 of qualified expenses.

Foreign Earned lncome Exclusion.

The foreign income exclusion from U.S. income taxes was $92,000. For 2012 it has been increased to $95.000.

Note: The exclusion amount applies to worldwide earned income as it applies to U.S. citizens and resident aliens. It includes worldwide earned income whether the taxpayer is living in the United States or living abroad.

lncome Limits for Excluding Education Savings Bond Interest.

The exemption phase-out range for interest on education savings bond interest for 2011 was as follows:

For Single returns	$71,100 - $86,100
For Married Filing Jointly returns	$106,650 - $136,650
For Head of Household	$71,100 - $86,100

The phase-out range for 2012 returns has been increased to the following amounts:

For Single returns	$72,850 - $87,850
For Married Filing Jointly returns	$109,250 - $139,250
For Head of Household	$72,850 - $87,850

Adoption Credit or Exclusion.

The maximum adoption credit or exclusion for employer-provided adoption benefits for 2011 was $13,360.

For 2012 returns the maximum credit or exclusion has been decreased to $12.650.

The MAGI (Modified Adjusted Gross Income) income phase-out limit for 2011 was $185,210 to $225,210.

For 2012 returns the MAGI income phase-out limit has been increased from $189,710 to $229,710.

The credit for 2011 was refundable. For 2012 returns, the credit is not refundable.

Student Loan Interest Deduction.

The phase-out range for income for student loan interest for 2011 was as follows:

For Single returns	$60,000 - $75,000
For Married Filing Jointly returns	$120,000 - $150,000
For Head of Household	$60,000 - $75,000

For 2012 returns the phase-out range has been increased for joint filers only . The phase-out range for Single and Head of Household filers remains the same as in 2011 .

For Single returns	$60,000 - $75,000
For Married Filing Jointly returns	$120,000 - $155,000
For Head of Household	$60,000 - $75,000

The IRS publication specifically states that the joint return phase-out amount has increased to $155,000 for 2012, but there is no change for single or head of household filers. The maximum student loan deduction for 2011 was $2,500. The maximum deduction for 2012 remains at $2,500.

Commuter Highway Vehicle and Transit Pass Benefits.

The monthly limit on the exclusion of benefits on qualified transportation in a commuter highway vehicle and transit pass provided by an employer to its employees for 2011 was $230.

For 2012 returns, the monthly amount has been decreased to $125 per month.

Social Security Taxes.

Social security will be withheld from an employee's wages at the rate of 4.2% (down from 6.2%) up to the social security limit of $110,100. There is no change in the Medicare withholding.

The same decrease applies to net earnings from self-employment - the rate will be 10.4% (down from 12.4%) up to the social security wage limit of $110,100.

Expiring Benefits.

The following benefits are scheduled to expire or have been repealed and will not be available for 2012 income tax returns.

• Personal tax credits allowed against regular tax and alternative minimum tax.
• Work opportunity tax credit.
• Deduction for state and local general sales tax.
• Deduction for qualified tuition and related expenses expire.
• Deduction for educator expenses.
• Nonbusiness energy credits.
• Credit for tax credit bonds.
• Qualified electric vehicle passive activity credit.

Note: It is possible that one or more of the above benefits/credits will be restored by Congress by the end of 2012. Any that are restored will be included on our website, by mid-January, 2013.

Estate Taxes.

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 for calendar year 2011. Also, if the executor chooses to use the special use valuation method for qualified real property, the aggregate decrease in the value of the property resulting from the choice cannot exceed $1,040,000, up from $1,020,000 for 2011.

The annual exclusion for gift taxes remains at $13,000 for 2012.

Domestic Partners.

The Internal Revenue Service has issued guidelines for same-sex couples in community property states.

Under IRS rules, registered domestic partners living in California, Washington, or Nevada must each report half of their total community income on their own federal returns, along with any separate income. Because same-sex partners are not treated as spouses under federal law, they can not file a joint return or use "married filing separate" status, even though they may be permitted to file that way on their state tax returns. So one partner can use the standard deduction while the other itemizes on Schedule A.

The other community property states are:

• Arizona
• Idaho
• Louisiana
• Texas
• Wisconsin
• New Mexico

Long-Term Care Premiums.

Based on attained age before the close of the taxable year:

For 2011 returns, the limitations were as follows:

40 or less	$340
More than 40 but not more than 50	$640
More than 50 but not more than 60	$1,270
More than 60 but not more than 70	$3,390
More than 70	$4,240

The per diem limit for 2011 was $300.

For 2012 returns, the limitations are increased as follows:

40 or less	$350
More than 40 but not more than 50	$660
More than 50 but not more than 60	$1,310
More than 60 but not more than 70	$3,500
More than 70	$4,370

The per diem limit for 2012 is increased to $310.

Medical Savings Accounts - Self-only Coverage.

For the taxable year 2011, the term "High Deductible Health Plan" means a health plan that had an annual deductible that was less than $2,050 and not more than $3,050 and under which the annual out-of-pocket expenses required to be paid for covered benefits do not exceed $4.100.

For 2012, the annual deductible premium must not be less than $2,100 and not more than $3,150.

For family coverage in taxable year 2011, the annual deductible must not have been less than $4,100 and not more than $6,150 with required out-of-pocket expenses not more than $7,500.

For 2012 returns, the annual deductible premium must be less than $4,200 and not more than $6,300 with the required annual out-of-pocket expenses to be paid must not exceed $7,650.