What’s New for 2012 Tax Year

Coral Springs, Fla. , January 14, 2013

401(k)/403(b) Deferral Limits
Effective 2013 deferral limits to 401(k)/403(b) plans have increased to $17,500 per year for individuals under age 50, and to $23,000 for individual taxpayers age 50 and over.

IRA Contribution Phase-Out Range for Active Participation in Employer Plan
The new Modified Adjusted Gross Income (MAGI) limits affecting deductions for traditional IRA contributions in 2013 are:
Singles and Heads of Household - $59,000-$69,000,
Married Filing Jointly - $95,000-$115,000,
Married Filing Separately - $0-$10,000.
For Married Filing Jointly with a spouse not active participant in IRA plans MAGI phase-out limit is $178,000-$188,000.

Contribution limit to IRA accounts has changed for 2013 and comes to $5,500 for taxpayers under 50, and $6,500 for taxpayers age 50 and over.

Roth IRAs Phase-Out Range
The new Modified Adjusted Gross Income (MAGI) limits affecting deductions for Roth IRA contributions in 2013 are: Singles and Heads of Household - $112,000-$127,000, Married Filing Jointly - $178,000-$188,000, Married Filing Separately - $0-$10,000.

Contribution limit to IRA accounts has changed for 2013 and comes to $5,500 for taxpayers under 50, and $6,500 for taxpayers age 50 and over.

Adoption Credit
Effective 2012 the Adoption Expense Credit is no longer a refundable credit. It has been refundable only in 2010 and 2011. Refundable credit means that it can reduce your tax liability below $0 and result in a refund.

Child Tax Credit
Child Tax Credit remains at $1,000 per child and this credit has been extended permanently.

Defined Benefit Pension Plans
Effective 2012 plan liabilities are determined based on corporate bond segment rates. Beginning in 2012, any segment rate must be within 10% (increasing to 30% in 2016) of the average of such segment rates for the 25-year period preceding the current year. This provision is meant to stabilize the fluctuation in interest rates from year to year.

Estate and Gift Tax Exclusion
The exclusion for both the estate and gift tax is indexed for inflation and for 2012 will equal to $5,120,000.

Due Date of Form 1040
The 2012 tax year Form 1040 filing deadline is April 15, 2013. Extension to file can be obtained before April 15, 2013; it will allow filing before October 15, 2013. Please note, extension to file late does not mean extension to pay tax late.

Standard Deduction
Married Filing Jointly - $11,900 Single - $5,950 Head of Household - $8,700 Married Filing Separately - $5,950

Additional Standard Deduction for Age 65 and Over and/or Blind (Each)
Married Filing Jointly - $1,150 Married Filing Separately - $1,150 Qualified Widower - $1,150 Single - $1,450 Head of Household - $1,450

Personal Exemption - $3,800 per person

Standard Mileage Rate – 55.5 cents per mile