IRS announces new adjustments for tax year 2012

 
Taxpayers who are struggling to make ends meet may see some additional relief in 2012. The Internal Revenue Service recently announced inflationary adjustments relating to a number of income and estate taxes for 2012 that will impact consumers when they file their taxes in 2013.

To begin, the current personal and dependent exemption will increase to $3,800, up $100 from the 2011 allowance. Individuals who take standard deductions will also see a rise in the 2012 tax year, as single filers and married couples who file separately can claim $5,950, up $150. Married couples who file their taxes jointly will see a $300 increase as their standard deduction rises to $11,900. Head of household standard deductions will climb to $8,700, up $200 from 2011.

Tax bracket thresholds also increase for each filing status, so individuals should speak with their tax preparer about how they will be impacted.

A number of deductions and credit amounts have also been altered and may allow eligible families to lower their tax burdens further. For example, the earned-income tax credit is a popular and beneficial credit for many low-income households, and varies based on family size, filing status and other components. The EITC will increase from $5,751 in 2011 to $5,891 in 2012. The maximum income limit will also increase from $49,078 to $50,270. Individuals who take advantage of the lifetime learning credit will also see more leeway, as the modified adjusted gross income threshold at which the credit begins to phase out increases from $51,000 to $52,000 for single filers and heads of household. For married couples filing jointly, the phase-out amount increases from $102,000 to $104,000.

The credit and deduction amounts for certain benefits may fluctuate on a year-by-year basis, so it's important that consumers who plan on filing for these benefits speak with a tax professional to ensure they are up-to-date on the eligibility rules and allowances.

The IRS has recently made greater strides to help struggling families meet their tax burden and avoid undue stress by imposing reforms to its payment rules. Last year, the IRS announced it will not place a lien on taxpayers' properties unless they owe $10,000 or more, double the previous amount. The new rules may help taxpayers who owe money protect their credit during the repayment period and avoid negative actions being taken against their property.

About Liberty Tax Service
Liberty Tax Service is the fastest -growing retail tax preparation company in the industry’s history. Founded in 1997 by CEO John T. Hewitt, a pioneer in the tax industry, Liberty Tax Service has prepared over 8,000,000 individual income tax returns. With 42 years of tax industry experience, Hewitt stands as the most experienced CEO in the tax preparation business, having also founded Jackson Hewitt Tax Service.

Liberty Tax Service is the only tax franchise on the Forbes “Top 20 Franchises to Start,” and ranks #1 of the tax franchises on the Entrepreneur “Franchise 500.” Each office provides computerized income tax preparation, electronic filing, and online filing through eSmart Tax.  
Posted To: Tax Ranger's Blog By: Tax Ranger On: Wednesday, October 26, 2011
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