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Recently, the IRS released the updated figures as they apply to 2012 income tax rates and schedules, via Revenue Procedure 2011-52. Below is a summary of the key information from this procedure document.
Adoption Assistance
The credit for adoption expenses was changed by the Patient Protection and Affordable Care Act of 2010 (and others) such that this credit was increased to $13,170, and the credit became refundable. This provision will expire at the end of calendar year 2011, which will cause the credit to fall back to an amount of $10,000. This amount is then adjusted for inflation, such that the limit for 2012 is $12,650, and remains non-refundable. The limit for adopting a special needs child is the same at $12,650 for 2012. We’ll see if any changes come through to make any changes to the refundability.
The modified AGI limits for the phase-out of adoption credit assistance is between $189,710 and $229,710.
Tax Tables
For 2012, the tax rate tables are below:
Married Filing Jointly
| If Taxable Income is: | The Tax is: |
| Not over $17,400 | 10% of the taxable income |
| Over $17,400 but not over $70,700 | $1,740 plus 15% of the excess over $17,400 |
| Over $70,700 but not over $142,700 | $9,735 plus 25% of the excess over $70,700 |
| Over $142,700 but not over $217,450 | $27,735 plus 28% of the excess over $142,700 |
| Over $217,450 but not over $388,350 | $48,665 plus 33% of the excess over $217,450 |
| Over $388,350 | $105,062 plus 35% of the excess over $388,350 |
Head of Household
| If Taxable Income is: | The Tax is: |
| Not over $12,400 | 10% of the taxable income |
| Over $12,400 but not over $47,350 | $1,240 plus 15% of the excess over $12,400 |
| Over $47,350 but not over $122,300 | $6,482.50 plus 25% of the excess over $47,350 |
| Over $122,300 but not over $198,050 | $25,220 plus 28% of the excess over $122,300 |
| Over $198,050 but not over $388,350 | $46,430 plus 33% of the excess over $198,050 |
| Over $388,350 | $109,229 plus 35% of the excess over $388,350 |
Filing Single
| If Taxable Income is: | The Tax is: |
| Not over $8,700 | 10% of the taxable income |
| Over $8,700 but not over $35,350 | $870 plus 15% of the excess over $8,700 |
| Over $35,350 but not over $85,650 | $4,867.50 plus 25% of the excess over $35,350 |
| Over $85,650 but not over $178,650 | $17,442.50 plus 28% of the excess over $85,650 |
| Over $178,650 but not over $388,350 | $43,482.50 plus 33% of the excess over $178,650 |
| Over $388,350 | $112,683.50 plus 35% of the excess over $388,350 |
Married Filing Separately
| If Taxable Income is: | The Tax is: |
| Not over $8,700 | 10% of the taxable income |
| Over $8,700 but not over $35,350 | $870 plus 15% of the excess over $8,700 |
| Over $35,350 but not over $71,350 | $4,867.50 plus 25% of the excess over $35,350 |
| Over $71,350 but not over $108,725 | $13,867.50 plus 28% of the excess over $71,350 |
| Over $108,725 but not over $194,175 | $24,332.50 plus 33% of the excess over $108,725 |
| Over $194,175 | $52,531 plus 35% of the excess over $194,175 |
Estates and Trusts
| If Taxable Income is: | The Tax is: |
| Not over $2,400 | 15% of the taxable income |
| Over $2,400 but not over $5,600 | $360 plus 25% of the excess over $2,400 |
| Over $5,600 but not over $8,500 | $1,160 plus 28% of the excess over $5,600 |
| Over $8,500 but not over $11,650 | $1,972 plus 33% of the excess over $8,500 |
| Over $11,650 | $3,011.50 plus 35% of the excess over $11,650 |
Child Tax Credit and Education Credits
For 2012, the Child Tax Credit is $1,000. The maximum amount of Additional Child Tax Credit that is refundable (via Form 8812) is $3,000.
The American Opportunity Credit (formerly the Hope Credit) remains the same for 2012 at a maximum credit of $2,500 with the calculations remaining the same – 100% of the first $2,000 of qualified tuition and expenses, and 25% of the expenses above $2,000 up to $4,000 in total. The modified AGI phase-out ranges are exactly the same as in 2011.
The Lifetime Learning Credit is maximum amount is also unchanged in 2012, at $2,000, calculated as 20% of the allowable expenses up to $10,000. The modified AGI limit for phase-out of this credit is increased to between $52,000 and $62,000 for Single filers. The phase-out limit range for married filing jointly filers is increased to between $102,000 and $124,000.
Earned Income Credit
For 2012, the following amounts apply for Earned Income Tax Credit. The earned income amount is the amount of earned income at or above which the maximum amount of the earned income credit is allowed. The threshold phaseout amount is the amount of AGI (or if greater, earned income) above which the maximum amount of the credit begins to phase out. The completed phase-out amount is the amount of AGI (or if greater, earned income) at or above which no credit is allowed.
| Number of Qualifying Children | ||||
| Item | 1 | 2 | 3+ | None |
| Earned Income Amount | $9,320 | $13,090 | $13,090 | $6,210 |
| Maximum Amount of Credit | $3,169 | $5,236 | $5,891 | $475 |
| Threshold Phase-out (Single, HoH) | $17,090 | $17,090 | $17,090 | $7,770 |
| Completed Phase-out (Single, HoH) | $36,920 | $41,952 | $45,060 | $13,980 |
| Threshold Phase-out (MFJ) | $22,300 | $22,300 | $22,300 | $12,980 |
| Completed Phase-out (MFJ) | $42,130 | $47,162 | $50,270 | $19,190 |
The investment income limit has increased for 2012 to $3,200, up from $3,100 in 2011.
Standard Deduction
As is the case pretty much every year, the Standard Deduction has also increased. The table below details the amounts for 2012:
| Filing Status | Standard Deduction |
| Married Filing Jointly | $11,900 |
| Head of Household | $8,700 |
| Single | $5,950 |
| Married Filing Separately | $5,950 |
For dependents of others, the Standard Deduction is the greater of $950 or $300 plus the amount of earned income of the taxpayer.
The additional Standard Deduction for folks over age 65 or blind is $1,150 if married and filing jointly, or $1,400 for singles or heads of household.
Personal Exemption
The amount of the personal exemption is increased to $3,800 in 2012 from the 2011 amount of $3,650.
Long-Term Care Premium Deductions
The amount of deductible long-term care premiums for 2012 is as follows:
| Age by end of year | Premium deductible |
| 40 or less | $350 |
| More than 40 but not more than 50 | $660 |
| More than 50 but not more than 60 | $1,310 |
| More than 60 but not more than 70 | $3,500 |
| More than 70 | $4,370 |
Estate and Gift Taxes
For 2012, the applicable Unified Credit for estate and gift tax exclusion is increased from $5,000,000 to $5,120,000.
The annual gift tax exclusion remains at $13,000 for 2012.
Arrow Shaft Tax
In case you’re wondering, the tax on the first sale by the manufacturer, producer, or importer of any shaft of any type used in the manufacture of certain arrows is $.046 per shaft. (More at § 4161(b)(2)(A) if you need the details on this one.)
