Tax Law Changes

The American Taxpayer Relief Act of 2012 has extended the following items that may affect your 2012 tax return -
  • Above-the-line deduction for certain expenses of elementary and secondary school teachers through the end of 2013
  • Deduction for state and local general sales taxes for taxpayers who itemize their deductions through the end of 2013
  • Above-the-line deduction for qualified tuition related expenses has been extended through the end of 2013

A few other changes included in the bill -
  • The American Opportunity Tax Credit has been extended through the end of 2017
  • Increased Earned Income Tax Credit for families with three or more children has been extended through the end of 2017
  • Bonus Depreciation has been decreased from 100% in 2011 to 50% in 2012 for depreciable assets placed into service during 2012. The Bonus Depreciation will continue to be 50% for your 2013 tax return for items placed into service after 12/31/2012 and before 01/01/2014.

First-time Homebuyer Repayment -
Homeowners, who purchased their home in 2008 and received the First-time Homebuyer’s credit of $7,500 on a 15 year repayment plan, are in year 3. Please remember to complete form 5405 with to add the repayment to your tax return.

Homeowners who purchased their home in 2009 and received the First-time Homebuyer’s credit of $8,000 have completed their 36 month, main-home, ownership requirements during 2012. If you sold or otherwise disposed of your home after the 36 month minimum ownership requirements, you are not required to repay any portion of the credit.
Homeowners who purchased their home in 2010 through 2011 and received the First-time Homebuyer’s credit of $8,000 must complete the 36 month, main-home, ownership requirement to avoid repayment of any or all of the credit received.

Standard Deduction and Personal Exemption Changes in 2012 -
The Standard Deduction for each filing status has increased from the 2011 amounts. Personal Exemptions for yourself, your spouse, and qualified dependents listed on your return has also increased. The deduction and exemption amounts are automatically calculated in your account based on what you enter.

Standard Deduction Tax Year 2011 Tax Year 2012
Single and Married Filing Separately $5,800 $5,950
Married Filing Jointly $11,600 $11,900
Qualifying Widow $11,600 $11,900
Head of Household $8,500 $8,700
Additional deduction for Single, HOH, MFS filers OVER 65 or Blind $1,450 $1,450
Additional Deduction for Married Filing Joint and Qualifying Widow $1,150 $1,150
Personal Exemptions31Resource $3,700 $3,800

Maximum Earned Income Tax Credit has increased for 2012 -
The maximum amount of Earned Income Tax Credit has increased from the 2011 amounts. Low to Moderate income workers and working families many qualify for as much as $5,891 in Earned Income Tax Credit. The maximum income limit also increased from $49,078 in 2011 to $50,270 for 2012. This is automatically calculated based on your total earned income and number of children entered on your tax return.

Foreign Earned Income Exclusion increased for 2012 -
You may exclude up to $95,100 of qualifying foreign earned income on your 2012 tax return. You will find this form under Other Income in the Income Menu listed as Foreign Earned Income. You must pass either the Physical Presence Test or the Bona-fide Residence test at the time of filing in order to qualify for this exclusion.

Standard Mileage Rates for 2012 and 2013 -
The Standard mileage rates for 2012 that will apply to this year’s tax return are as follows:

Business Miles Driven $0.555
Medical and Moving Miles Driven $0.2347
Charitable Miles Driven $0.1449

The Standard Mileage rates for 2013 that will apply to next year’s tax return are as follows:

Business Miles Driven $0.565
Medical and Moving Miles Driven $0.24
Charitable Miles Driven $0.14

The mileage deduction, based on the above rates, is automatically calculated for you in your account. All you have to do is enter your miles driven and we’ll do the rest.

Alternative Minimum Tax Changes -
A permanent patch has been passed, raising the minimum exemption amount for 2012 from $33,750 to $50,600 for individual filers and from $45,000 to $78,750 for married filing jointly filers. The bill also allows for nonrefundable personal credits against Alternative Minimum Tax.
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Form 1040EZ is the simplest form to fill out.
You may use Form 1040EZ if you meet all the following conditions:

If you file Form 1040EZ, you cannot itemize deductions or claim any adjustments to income or tax credits (other than the earned income credit).