A belated Happy New year to everyone.. Never late than ever. I hope this year bring a reasonable amount of growth and prosperous to our country and everyone’s life as well.
Let me start this year with blog on the update about IRS inflation adjusts on various tax items. Usually every year the Internal Revenue Service adjusts for inflation tax brackets, tables, exemptions, thresholds and other items. In recent years these annual adjustments have been minimal because inflation has been very low. This pattern holds true for 2012. Here are the major adjustments for 2012:
- 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.
- For an estate of any decedent dying during calendar year 2012, the basic exclusion from estate tax amount is $5.12 million, up from $5 million 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 $1.04 million, up from $1.02 million for 2011.
- The annual exclusion for gifts remains at $13,000.
- The amount unearned income of minor children that is not subject to the so-called “kiddie tax” remains at $950.
- The annual limit for Section 179 expensing, which businesses can use to deduct the cost of new business equipment in a single year, has been reduced to $139,000 (down $361,000 from 2011). The $139,000 limitation is reduced (but not below zero) by the amount the cost of Section 179 property placed in service during the 2012 taxable year exceeds $560,000.
- 401(k)/403(b)/457 contribution limit: $17,000 (up $500 from 2011).
- The income limit for full Roth IRA contributions for 2012 is $110,000 for singles and $173,000 for joint filers (up $3,000 for singles and up $4,000 for joint filers from 2011).
- The monthly tax-free parking benefit employers can provide their employees for 2012 rises to $240, up $10 from the limit in 2011.
For more detail listing on other items, please visit IRS.org