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What’s New on Form 1040 in 2012

By TaxpertiseFOXBusiness

After Congress averted the fiscal cliff at the very last hour at the start of the year, the folks at the IRS had the big job of redesigning some tax forms to comply with the newly-passed measures.

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The agency put the finishing touches on tax forms so taxpayers can start filing electronically as of January 30. Here is what to expect on the IRS new 2012 Form 1040:

Line 15. If you converted to a Roth IRA from another plan in 2010, you may have elected to defer the taxes, paying half in 2011 and the other half in 2012. If that is the case, then you will show the amount of the IRA distribution that remains deferred on Line 15b.

Line 16. If you rolled over an amount from a 401(k) plan or 403(b) plan to a designated Roth account in 2010 and chose to pay the income tax on the distribution in 2011 and 2012, report the remaining amount for 2012 on line 16b.

Schedule 8812. This form replaces Form 8812 used to calculated your additional child tax credit.

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Line 40. Indicate the total of your itemized deductions or list the standard deduction on this line. The standard deduction for 2012 is $5,950 (up from $5,800 for 2011) for single and married filing separately, $11,900 (up from $11,600 for 2011) for married filing joint and qualifying widow(er)s, and $8,700 (up from $8,500 for 2011) for head of household. If you have deductions for medical expenses (above 7.5% of your adjusted gross income), state income or sales taxes paid, real estate taxes, DMV fees, mortgage interest, charitable contributions, theft and casualty (after income exclusions), employee business expenses – to name the most common deductions – in excess of these thresholds, you may itemize deductions instead for a greater tax savings.

Line 42. You may take an exemption for yourself, your spouse and each dependent. For 2012 the exemption is $3,800 for each up from $3,700 in 2011.

Line 45. The alternative minimum tax (AMT) got the patch it needed to prevent it from wrongly affecting more than six million taxpayers. The AMT exemption amount is $50,600 for single filers, $78,750 for married filing joint and $39,375 for married filing separately. Fewer credits can be used to offset AMT.

Line 56. The maximum amount of self-employment income subject to the self-employment tax for 2012 is $110,100, up from $106,800 in 2011. If you have a business loss for the year, you may still elect to pay self-employment tax. This funds your Social Security and Medicare accounts.

Line 64. The maximum Earned Income Credit has changed and the income thresholds have also changed. This is a complicated issue requiring due diligence. Make sure you complete the worksheets to determine if you qualify.

Line 69. Excess Social Security Withheld. The maximum amount of social security that should have been withheld from your 2012 wages is $4,624.20. However, if you worked at more than one job and made more than $110,100 you may have had too much social security withheld. Report the excess on this line and receive a refund.