Here are a couple more changes following up to yesterday’s blog entry:
Earned Income Tax Credit
Changes to the Earned Income Tax Credit (EITC) make the credit more available, and valuable in tax year 2012 than it was in tax year 2011. Credit eligibility is based on income and household size. Households with three or more qualifying children will receive a 2012 tax credit of $5,891 if their Adjusted Gross Income (AGI) is less than $45,060 when filing individually or $50,270 when married filing jointly. The equivalent tax relief in 2011 was $5,751 for individuals with an annual AGI less than $43,998 or $49,078 when married filing jointly.
On the other end of the EITC spectrum, for tax year 2012, households with no qualifying children will receive a $475 tax credit if their AGI is less than $13,980 when filing individually or $19,190 when filing married filing jointly. Similar middle tier credit adjustments are available for taxpayers claiming one or two qualifying children.
For tax year 2012, the ceiling on elective deferrals without the need to pay upfront taxes for 401(k), 403(b), certain 457 accounts, and thrift savings plans increased $500 from $16,500 to $17,000 for tax year 2012. Additionally, the limit on annual additions to contribution plans increased for tax year 2012 from $49,000 to $50,000.
These are just the highlights of some of the changes that you’ll find when working on your tax returns come April. If some of these changes caught you off guard, learn your lesson and prepare a plan now for tax year 2013… due April 2014.