standard deduction

Retirement Tax

Retirement Contributions Limits and Other Tax Benefits for 2012

The IRS has announced the maximum contribution limits for your 401(k) and other retirement plans for 2012. In general, many of the pension plan limitations will change for 2012 because the increase in the cost-of-living index met the statutory thresholds that trigger their adjustment. However, other limitations will remain unchanged. Highlights include:

  1. Individuals Limits for 401(k): Annual compensation limit $250,000 in 2012 (up from $245,000 in 2011); maximum annual contribution $17,000 in 2012 (up from $16,500 in 2011) with a $5,500 contributions for age 50 and older.
  2. Savings Incentive Match Plan for Employees (SIMPLE): Contribution limit $11,500 with a $2,500 catch up clause for age 50 and older. Remains unchanged from 2011.
  3. Individual Retirement Plans (IRAs): Maximum contribution $5,000 with a $1,000 catch up contribution for those age 50 and older. The contribution can be split between a Roth IRA and a traditional IRA, but must not exceed $6,000. Remains unchanged from 2011.

Looking Ahead to 2012

The value of each personal and dependent exemption will increase $100 to $3,800 in 2012.

The new standard deduction is $11,900 in 2012 for married couples filing jointly. Individuals and married people filing separately will see the standard deduction rise to $5,950 and the standard deduction for head of household rises to $8,700. Nearly two out of three taxpayers take the standard deduction, rather than itemizing deductions.

Annual gift tax exclusion remains at $13,000 in 2012. The basic exclusion from estate tax amount increases to $5,120,000, from $5,000,000 in 2011

Accounting Financial Planning Tax

Check Out Exemptions and Deductions for 2011

With the 2010 tax filing deadline behind us, it’s time to plan for 2011.

The standard and itemized deductions for 2011 are as follows:

Standard Deduction for 2011:

  • $5,800 for unmarried taxpayers or married taxpayers filing separately
  • $11,600 for married taxpayers filing jointly
  • $8,500 for taxpayers filing as head of household

Personal Exemption for 2011:

The personal exemption amount is $3,700 (up from $3,650 in 2010).

Remember that there’s a temporary repeal of the standard deduction and personal exemption income limit phaseout until 2012. This means that all taxpayers will receive the full deduction and exemption amounts. Give us a call if you have questions about this.

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