2012 Personal Exemption, Standard Deduction, EITC and Foreign Earnings Deduction Change

With the 2011 tax filing deadline past (unless you filed for an extension) it’s a good time to remind yourself about some key 2012 tax changes. You can see the latest 2012 tax tables here which saw a widening of tax brackets and increases in personal exemptions and standard deductions due to inflation.

Personal and dependent exemptions saw a $100 rise to $3,800. The standard deduction, for tax payers who do not itemize deductions such as mortgage interest, rose to $11,900 for married couples filing a joint return, ($300 increase over 2011) $5,950 for singles and married individuals filing separately ($150 increase) and $8,700 for heads of household ($200 increase)

Another widely used credit, the earned income tax credit (EITC) for low income workers, rose by $140 to $5,891. To claim this credit you need to be under the maximum income threshold which rose by $1,192 to $50,270. The credit has other restrictions and factors which are detailed in this article

For Americans who live abroad on a permanent basis, they should also see less of a US tax impact as the the foreign earned income deduction rose by over $2,00 to $95,100. This is the amount of income they can earn overseas before being subject to US taxes, assuming they satisfy residency and related conditions.

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