As stated by the IRS through their release dated October 20, 2011, many tax benefits in 2012 have been adjusted due to inflation metrics.  For the 2012 tax year, personal exemptions and standard deductions will rise and tax brackets will widen due to inflation.  The adjustments discussed below are for the 2012 tax year, meaning January 1, 2012 through December 31, 2012 with tax filings due, generally, April 15, 2013. 

By matter of law, dollar amounts attached to various IRS provisions are revised on annual basis to keep “pace” with inflation.  Some of the highlights are as follows for the most recent release of changes:

·         Personal and Dependent Exemption – Up $100 to $3,800 for per exemption.

·         Standard Deduction –

o   Up $300 for those Married Filing Jointly to $11,900

o   Up $150 for those filing Single to $5,950

o   Up $200 for those filing as Head of Household to $8,700

·         Tax brackets widened – For a complete listing of your bracket, please follow this link www.irs.gov/pub/irs-drop/rp-11-52.pdf

A few other changes that I want to highlight are as follows:

·         Adoption Credit – The maximum credit allowed is the amount of qualified adoption expenses up to $12,650 subject to phase out limits for income in excess of $189,710 to $229,710.

·         Eligible Long-Term Care Premiums – In order to be includible in the term “medical care” the limits on premiums are as follows as determined by age group:

o   Age 40 or less -- $350

o   Age 40 to 50 -- $660

o   Age 50 to 60 -- $1,310

o   Age 60 to 70 -- $3,500

o   Age 70 or older -- $4,370

As always, if you have any questions about your tax position for 2011 or as you we move into 2012, please contact your CPA directly or our Firm for a consultation.  Happy Halloween to all!