Skip to main content

In 2012, Many Tax Benefits Increase

Thomson Franklin circulated the below newsletter to their subscribers.  Please continue reading for very helpful information as you begin thinking about taxes!

“For tax year 2012, personal exemptions and standard deductions will rise and tax brackets will widen due to inflation. Please read further to see which inflationary measures may affect your return next year:

By law, the dollar amounts for a variety of tax provisions, affecting virtually every taxpayer, must be revised each year to keep pace with inflation. New dollar amounts affecting 2012 returns, filed by most taxpayers in early 2013, include the following:

  • The value of each personal and dependent exemption, available to most taxpayers, is $3,800, up $100 from 2011.
  • 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.
  • Tax-bracket thresholds increase for each filing status. For a married couple filing a joint return, for example, the taxable-income threshold separating the 15-percent bracket from the 25-percent bracket is $70,700, up from $69,000 in 2011.

Credits, deductions, and related phase outs.
  • For tax year 2012, the maximum earned income tax credit (EITC) for low- and moderate- income workers and working families rises to $5,891, up from $5,751 in 2011. The maximum income limit for the EITC rises to $50,270, up from $49,078 in 2011.The credit varies by family size, filing status and other factors, with the maximum credit going to joint filers with three or more qualifying children.
  • The foreign earned income deduction rises to $95,100, an increase of $2,200 from the maximum deduction for tax year 2011.
  • The modified adjusted gross 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.
  • For 2012, annual deductible amounts for Medical Savings Accounts (MSAs) increased from the tax year 2011 amounts; please see the table below:

Medical Savings Accounts (MSAs)
Self-only coverage
Family coverage
Minimum annual deductible
$2,100
$4,200
Maximum annual deductible
$3,150
$6,300
Maximum annual out-of-pocket expenses
$4,200
$7,650

The $2,500 maximum deduction for interest paid on student loans begins to phase out for a married taxpayers filing a joint returns at $125,000 and phases out completely at $155,000, an increase of $5,000 from the phase out limits for tax year 2011. For single taxpayers, the phase out ranges remain at the 2011 levels.

Estate and Gift
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 gifts remains at $13,000.

Other Items
  • The monthly limit on the value of qualified transportation benefits exclusion for qualified parking provided by an employer to its employees for 2012 rises to $240, up $10 from the limit in 2011. However, the temporary increase in the monthly limit on the value of the qualified transportation benefits exclusion for transportation in a commuter highway vehicle and transit pass provided by an employer to its employees expires and reverts to $125 for 2012.
  • Several tax benefits are unchanged in 2012. For example, the additional standard deduction for blind people and senior citizens remains $1,150 for married individuals and $1,450 for singles and heads of household.

Compliments of Thomas H. Franklin & Associates, LLC, 907 W. Roscoe St., Suite 2, Chicago, IL 60657, (312) 310-3171, www.thomashfranklin.com.

Popular posts from this blog

Texas State Affairs Committee hears testimony on two adoption bills

On March 27, 2017, Ms. Cochran-Green testified before the Texas Senate State Affairs Committee on two adoption-related bills, SB 329 and
SB 1362.  You can watch the live testimony here. Ms. Cochran-Green's testimony is the Part 1 of the State Affairs Meeting on March 27.  Her testimony is in the second hour and she testified separately on each bill.

SB1362 is authored by Sen. Campbell in which she proposes changes to the voluntary adoption registry.  Ms. Cochran-Green testified her opposition to the bill as much of the proposed bill is already codified in the Texas Family Code and is common practice among adoption agencies.

SB329 is authored by Senator Creighton in which he proposes to allow adult adopted persons to obtain their original birth certificates at the age of 18.  Ms. Cochran-Green supports this bill as it allows adopted persons in closed adoptions primarily from the 1930s-1990s to seek reunions with their birth parents and obtain medical history that is needed.  This…

Mother's Day: A Time for Reflection and Celebration

This is the time of year that we celebrate motherhood, not only the day-to-day life of being a mom, but also the journey itself.  For some, infertility challenges that journey.  Thankfully there are more options than ever for those who want to become a mother. For many, like myself, the solution was adoption.  I am so thankful for the miracle of adoption, but is it right for you?  The following questions may help you find your answer.
Are you emotionally prepared for adoption? As with making any family planning decision, adoption requires a lot of self-reflection. It also requires that you come to terms with any grief you are experiencing resulting from infertility issues. A friend who adopted told me that she decided to adopt because the chances of becoming a parent were much higher than IVF. That’s true, but there are other challenges to consider. Open adoption is now the norm and it is recommended by experts in the field. Consequently, birth parents will become a part of your famil…

Documents Every Graduating Senior and College Student Needs

Now that high school graduation is upon us, it’s a time for celebration and reflection for parents and students alike. For parents, you now face the fact that your little bird is leaving the nest.  Is he or she ready? Legally, they are adults now and entitled to privacy protections. This means that even though your child may be relying on your financial support, privacy laws prohibit financial institutions, medical providers and colleges from disclosing private information concerning your child unless authorized. In case of an emergency, your child needs the following documents in place for you to be able to help them and make decisions on their behalf:
  1. Durable Power of Attorney: This document allows you to manage their financial affairs (either immediately or in the future) should they travel abroad or become mentally or physically unable to do so. This includes managing their financial accounts,  renewing their car registration, or filing a tax return on their behalf.
  2. Medica…