The tax code is ever evolving and 2012 will be no different for taxpayers. The following are some key facts and changes to the tax code for the upcoming year:
ߦ The 10%, 15%, 25%, 28%, 33% and 35% individual and trust tax rates will remain in effect until December 31, 2012.
ߦ Standard deductions were increased to $11,900 for individuals that are married filing jointly, $8,700 for individuals filing as head of household, and $5,950 for individuals filing as single.
ߦ The personal exemption amount has been raised to $3,800.
ߦ The estate tax top rate is 35% with a gift tax exemption of $5 million.
ߦ Section 179 deduction increased to $560,000 for capital assets acquired in 2012.
ߦ 50% bonus depreciation is allowed for qualified assets placed in service in 2012.
ߦ The tax on capital gains and qualified dividends is 0% for the 15% income tax bracket or below and 15% for the 25% income tax bracket or above.
ߦ Required minimum distributions must begin in the year a participant turns 70 1/2.
ߦ The IRA contribution limit remains at $5,000 or $6,000 if the participant is 50 or older.
ߦ The social security taxable wage limit was increased to $110,100 this year from $106,800 for last year. Also changed, retirees under full retirement age now can earn up to $14,640 without losing benefits.
ߦ The employee OASDI (Social Security) tax rate remains at 4.2% through February 29, 2012 (although this is likely to be extended through December 31, 2012.) Also, the OASDI tax rate under SECA (self-employment tax) remains at 10.4% (again through February 29, 2012, and subject to extension.)
ߦ Mileage rates for business and medical were increased to $0.555 and $0.23 respectively. The mileage rate for charity remains the same at $0.14.
For those of you without a Valentine’s Day present for their significant other, I have taken care of it for you. I prepared a reference guide for 2012, Tax Facts at a Glance, which highlights important tax rates and deductions for businesses and individuals.