As you prepare for the upcoming tax season, we thought you might find this brief rundown of 2012 tax changes useful:
• PAYROLL TAX CUT for employees extended through February 29, 2012. (Social security tax rate on wages up to $110,100 will be 4.2% rather than 6.2%.)
• ADOPTION TAX CREDIT decreases to $12,650 for adoption of an eligible child.
• SECTION 179 maximum deduction decreases to $139,000, with a phase-out threshold of $560,000.
• STANDARD MILEAGE RATE for business driving remains at 55.5¢ a mile. Rate for medical and moving mileage decreases to 23¢ a mile. Rate for charitable driving remains at 14¢ a mile.
• ESTATE TAX top rate remains at 35%, and the exemption amount increases to $5,120,000. The ANNUAL GIFT TAX EXCLUSION remains at $13,000.
• 401(k) maximum salary deferral increases to $17,000 ($22,500 for 50 and older).
• SIMPLE maximum salary deferral remains at $11,500 ($14,000 for 50 and older).
• IRA contribution limit remains at $5,000 ($6,000 for 50 and older).
• KIDDIE TAX threshold remains at $1,900 and applies up to age 19 (up to age 24 for full-time students).
• NANNY TAX threshold increases to $1,800.
• TRANSPORTATION FRINGE BENEFIT limit decreases to $125 for vehicle/transit passes and increases to $240 for qualified parking.
• SOCIAL SECURITY taxable wage limit increases to $110,100. Retirees under full retirement age can earn up to $14,640 without losing benefits.
• HSA CONTRIBUTION limit increases to $3,100 for individuals and to $6,250 for families. An additional $1,000 may be contributed by those 55 or older.
Thank you for visiting our site. Please call Bill Huml or Ronda Landry with any questions.