Published On: Mar 04 2013 11:29:41 AM ESTUpdated On: Mar 05 2013 02:03:46 AM EST
A lot has changed since you filed your taxes last year. Forbes magazine lists the 11 things you need to know before filing your 2012 tax returns.
Increased Personal Exemptions -- The value of personal exemptions are higher for 2012. The exemptions were worth $3,700 in 2011, but rose to $3,800 for 2012.
Adoption Credit Survives -- Temporarily extended in 2010, the adoption tax credit is now permanent but is no longer refundable.
Tax Breaks for Charitable Donations From IRAs Extended -- The new tax deal extended the qualified charitable distribution provisions which were set to expire through 2012 and 2013. Under the rules, withdrawals from an IRA owned by someone age 70½ or over that is paid directly to a qualified charity can be excluded from gross income.
Alternative Minimum Tax Relief -- The tax deal passed in January increased the the alternative minimum tax exemption for 2012 to $50,600 for single taxpayers (an increase of nearly $20,000) and $78,750 for married taxpayers filing jointly (an increase of more than $30,000). AMT relief will also be adjusted for inflation each year starting in 2012.
Sales Tax Deductions Still an Option -- The fiscal cliff tax deal extended the right of taxpayers who live in states without an income tax to deduct the sales tax they paid instead.
Roth Conversions May Be Taxable -- Taxpayers who converted or rolled over amounts to a Roth IRA in 2010 and did not include the entire amount in income in 2010 may need to report half of that taxable income on their 2012 returns.
Payroll Tax Credit -- It may have expired this year, but the payroll tax credit was still in place for 2012. That means nothing to employees subject to withholding, but those who are self-employed will receive an adjustment on their self-employment taxes when filing their federal tax return.
Education Tax Breaks Strengthened -- The American Opportunity Credit was extended through 2012 for tuition, certain fees and course materials for higher education.The Lifetime Learning Credit is also still applicable.
More Information On W-2s -- Under the Affordable Health Care Act, most employers are now required to report the value of health care benefits received by an employee on a federal W-2 form. It will appear in Box 12 with code DD, but don't worry -- it remains tax-free.
Underwater Taxpayers -- The fiscal cliff deal extended limited tax relief for taxpayers facing financial difficulties under the Mortgage Forgiveness and Debt Relief Act of 2007. Under the Act, qualified homeowners who were forced into foreclosure or mortgage restructuring on a principal residence could exclude income of up to $2 million on the mortgage foregiveness.
To read more about Forbes' 11 tax changes you need to know about click here.