INFLATION = INCREASED TAX BENEFITS? YES FOR 2012!

Inflation = Increased Tax Benefits? Yes for 2012!

Today’s economy sometimes makes us feel like the flower in the picture, which leaves us asking is there any benefit from the situation. Well I do have good news amongst all the bull (referring to the picture of course). Uncle Sam is increasing various tax breaks effective for the 2012 tax year including:

Each personal and dependent exemption will be $3,800, which is up $100 from this year.

The new standard deduction is $11,900 for married couples filing jointly, $5,950 for single individuals and those couples that are filing separate, and $8,700 for people filing as head of household. These increased by various amounts as much as $300 from this year.

Tax-bracket thresholds have increased for each filing status. This essentially means that more of the money you make will be taxed at more favorable rates. Most will not notice a huge difference in overall tax savings, but everything helps.

Additionally, many other deductions and credits have been adjusted for inflation as well. Among these is the Earned Income Credit which will increase by various amounts depending on filing status and amount of dependents claimed. The foreign income deduction, income thresholds for education benefits, and medical savings account deductible amounts will all rise slightly in 2012 just to mention a few. At least in these inflationary times we will see some benefit; however slight it might be in the overall picture!