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Tax facts, stats and changes for 2012

The tax code is ever evolving and 2012 will be no different for taxpayers. The following are some key facts and changes to the tax code for the upcoming year:

• The 10%, 15%, 25%, 28%, 33% and 35% individual and trust tax rates will remain in effect until December 31, 2012.

• Standard deductions were increased to $11,900 for individuals that are married filing jointly, $8,700 for individuals filing as head of household, and $5,950 for individuals filing as single.

• The personal exemption amount has been raised to $3,800.

• The estate tax top rate is 35% with a gift tax exemption of $5 million.

• Section 179 deduction increased to $560,000 for capital assets acquired in 2012.

• 50% bonus depreciation is allowed for qualified assets placed in service in 2012.

• The tax on capital gains and qualified dividends is 0% for the 15% income tax bracket or below and 15% for the 25% income tax bracket or above.

• Required minimum distributions must begin in the year a participant turns 70 1/2.

• The IRA contribution limit remains at $5,000 or $6,000 if the participant is 50 or older.

• The social security taxable wage limit was increased to $110,100 this year from $106,800 for last year. Also changed, retirees under full retirement age now can earn up to $14,640 without losing benefits.

• The employee OASDI (Social Security) tax rate remains at 4.2% through February 29, 2012 (although this is likely to be extended through December 31, 2012.) Also, the OASDI tax rate under SECA (self-employment tax) remains at 10.4% (again through February 29, 2012, and subject to extension.)

• Mileage rates for business and medical were increased to $0.555 and $0.23 respectively. The mileage rate for charity remains the same at $0.14.

For those of you without a Valentine’s Day present for their significant other, I have taken care of it for you. I prepared a reference guide for 2012, Tax Facts at a Glance, which highlights important tax rates and deductions for businesses and individuals.

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