The Internal Revenue Service recently released a set of new tax deduction regulations, which will take effect for 2012 returns. The IRS has broadened existing tax brackets and increased the amounts allowed for standard deductions and personal exemptions, all due to the rise of inflation.
When they file in 2013, taxpayers will be able to value each personal and dependent exemption at $3,800. Single individuals and married couples filing separately will enjoy a standard deduction of $5,950, and married couples filing jointly will see a standard deduction of $11,900. Heads of households will deduct $8,700. These figures represent a rise of from $100 to $300 over the previous year’s allowances.
In addition, the maximum Earned Income Tax Credit extended to lower- and middle-income working families will go up by $140, to reach a 2012 figure of $5,891. Households earning up to $50,270 will be eligible to file for the EITC, representing a rise over the 2011 income threshold, which was $49,078. The IRS has also increased the allowable foreign earned income deduction by more than $2,000, and expanded other criteria as well. To make sure you take full advantage of all current and future regulations, consult your tax preparation professional.
Duban Sattler and Associates, LLP, is a Los Angeles accounting, tax preparation, business management, and financial planning firm headed by Dennis L. Duban and Troy L. Sattler.
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