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Credits, deductions due to expire revived for tax season

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Numbers to know when you file

PERSONAL EXEMPTION:

• Each personal or dependent exemption is worth $3,800.

STANDARD DEDUCTION:

• $11,900 for married couples filing a joint return, and qualifying widows and widowers

• $5,950 for singles and married individuals filing separate returns

• $8,700 for heads of household

• Taxpayers who are 65 or older or who are blind may be eligible for a higher standard deduction.

ALTERNATIVE MINIMUM TAX THRESHOLD:

• $78,750 for a married couple filing a joint return, and qualifying widows and widowers

• $50,600 for singles and heads of household

INCOME TAX BRACKETS:

• 10 percent, 15 percent, 25 percent, 28 percent, 33 percent, 35 percent

EARNED INCOME TAX CREDIT:

To qualify income can be no greater than:

• $45,060 ($50,270 married filing jointly) with three or more qualifying children

• $41,952 ($47,162 married filing jointly) with two qualifying children

• $36,920 ($42,130 married filing jointly) with one qualifying child

• $13,980 ($19,190 married filing jointly) with no qualifying children

• Investment income cannot be more than $3,200 or less for the year.

Maximum credit:

• $5,891 with three or more qualifying children

• $5,236 with two qualifying children

• $3,169 with one qualifying child

• $475 with no qualifying children

CAPITAL GAINS:

• 0 percent if taxpayer is in the 10 percent or 15 percent income tax brackets

• 15 percent top rate if taxed in higher brackets

Daily Photo Galleries

By The Associated Press
Wednesday, Jan. 23, 2013, 7:04 p.m.
 

WASHINGTON — Taxpayers preparing to file their 2012 returns can breathe a collective sigh of relief.

The alternative minimum tax, or AMT, has been patched — permanently — and several tax credits and deductions that technically expired at the end of 2011 were extended as part of the “fiscal cliff” legislation that Congress passed and President Obama signed into law in January.

“It certainly puts back into place many of the tax benefits that had expired for many people,” said Mark Steber, chief tax officer with Jackson Hewitt Tax Services. “The extenders will be back on people's tax returns, making their 2012 refunds larger than they would have been.”

But the delay in congressional action could mean confusion for some taxpayers over what credits and deductions still exist.

That could make going it alone on tax day costly. Experts say people should seek some guidance, whether it's from a professional tax preparer, up-to-date software programs or tax guides, before filing returns.

More than 90 percent of taxpayers go to a tax preparer or use tax software to file their returns, estimated Jim Buttonow, a 20-year IRS veteran who is vice president of products for New River Innovation, a tax technology company.

The Internal Revenue Service will begin accepting returns on Jan. 30 — an eight-day delay necessitated by the late congressional action.

“We have worked hard to open tax season as soon as possible,” IRS Acting Commissioner Steven T. Miller said. “This date ensures we have the time we need to update and test our processing systems.”

The agency said most taxpayers — more than 120 million households — would be able to begin filing on Jan. 30. But filing for those claiming energy credits, depreciation of property or general business credits will be delayed until late February or March.

Last year, the agency received 137 million returns.

Electronic filing increased by 6.2 percent to 113 million in 2012, an upward trend that tax experts expect to continue. Although most electronically filed returns are prepared by tax professionals, an increasing percentage of individuals are doing their own returns electronically.

Nearly 104 million people received refunds last year totaling about $283 billion. The average refund was $2,707, slightly less than the year before, according to the IRS.

As people sit down to do their taxes, they'll find that the standard deduction has been adjusted higher for inflation, to $11,900 for married couples filing jointly, $8,700 for heads of households and $5,950 for single taxpayers.

About two-thirds of taxpayers claim the standard deduction, according to Barbara Weltman, an author of J.K. Lasser's Tax Guide 2013.

Each personal exemption is worth $3,800 this year, up from $3,700 in 2011.

There are higher mileage rate deductions — 55.5 cents per mile if you use your car for business, 23 cents per mile for moving or medical issues and 14 cents a mile for charity.

 

 
 


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