It’s that time of year, when tax forms start arriving in the mail and you frantically begin searching for receipts for bills you paid months ago.
You’ll soon have to devote some time to crunching numbers for Uncle Sam, but this year’s task seems as though it may be a bit more daunting with the fiscal cliff tax deal shaking things up.
To make matters a little more bearable, here are nine tips to keep in mind when filing your 2012 tax returns:
1. The most important thing taxpayers should know is that they can’t file their returns until Jan. 30, said Tom Baird, a certified public accountant and president of Toledocpas.com on Reynolds Road in Toledo. The IRS will begin accepting tax returns on that date after updating forms and completing programming and testing of its processing systems. In addition, there are a slew of other forms that the department will not accept until February or March, including mortgage interest credit and qualified adoption expense forms. For a complete list, visit irs.gov.
2. Exemptions for dependents. Those little crumb snatchers who drain your pockets all year long can come in handy when it comes to your taxes. According to the IRS, your taxable income is lowered by $3,800 for each dependent you claim as an exemption on your 2012 taxes.
3. Child tax credit. Thanks to the fiscal cliff deal, for the next five years, some parents will be able to claim this special credit and scoop up $1,000 for each child younger than 17. Search the IRS’s Web site for more information.
4. Child and dependent care credit. This one allows you to deduct up to 35 percent of the money you’ve been shelling out to a day care center or baby sitter while you go off to work or look for a job, up to a maximum of $6,000. Once at risk of extinction, the fiscal cliff deal made this credit permanent. Check out IRS Publication 503 for details.
5. Earned income tax credit. The EITC benefits low to moderate-income people who have earned income for wages, self-employment, or farming, reducing the amount of tax they owe and possibly leading to a fat refund. To qualify, your 2012 adjusted gross income must be less 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
Checkout irs.gov for a complete list of guidelines.
6. Adoption credit. You’ll have to wait until February or March to claim the adoption credit, but nonetheless, you may earn a tax credit for qualifying expenses paid to adopt a child. You must file a paper tax return and provide proper documentation of the adoption. IRS Publication 4903 has all the details.
7. Standard deductions have increased. The new standard deduction is $11,900 for married couples filing a joint return, up $300 from years past, and $5,950 for singles and married individuals filing separately, an increase of $150. The new head of household deduction was raised $200 to $8,700. Additional amounts are available for persons who are blind and/or are at least 65 years of age.
8. Education expenses. Education tax credits can help offset the costs of college tuition and other costs. The American Opportunity Tax Credit can help reduce your federal income tax by allowing you to claim up to $2,500 for qualified higher education expenses. The AOTC was included in the fiscal cliff agreement for five years.
9. Student loan interest. If you signed or co-signed for a student loan — yours or your child’s — you may be able to deduct interest paid on qualified loans. For 2012 and 2013, the new law also offers a deduction of up to $4,000 for college-related expenses such as tuition and required course materials.
Sources: IRS and Toledocpas.com.
Contact RoNeisha Mullen at: firstname.lastname@example.org or 419-724-6133.