Due to increase in inflation in year 2011, Government has relaxed the public by increasing some of the credits, deductions & phase outs in 2011. Here are some of them:

• For the year 2012, the annual deductible amounts for Medical Savings Accounts (MSAs) have been increased  from the tax year 2011 amounts; as below:

 Some additional information on phaseouts is that the amount of $2,500, which is the maximum deduction for interest paid on student loans starts to phase out for a married taxpayers filing a joint returns at $125,000 and phases out completely at $155,000, this is an increase of $5,000 from the phase out limits for tax year 2011.

• For tax year 2012, the maximum earned income tax credit (EITC)(remember this is a credit which is directly deducted from your amount of tax, so its a big deal) for low- and moderate- income workers and working families rises to $5,891, up which was $5,751 in 2011. The maximum income limit also rises for the EITC rises to $50,270, up from $49,078 in 2011. Always keep an eye on the qualifying criteria of this credit before making its use.The credit differs by characteristics like family size, filing status and other factors, with the maximum credit going to joint filers who have three or more qualifying children.
• There is also a change in modified adjusted gross income threshold related to lifetime learning credit. The new amount of phasing out for lifetime learning credit is $104,000 for joint filers, up from $102,000, and $52,000 for singles and heads of household, up from $51,000.

• The foreign earned income deduction rises to $95,100, which is an increase of $2,200 from the maximum deduction for tax year 2011.

So, incorporate these changes while preparing your income tax return for tax year 2011 &  if you do qualify for major deductions & credits, which a very good tax preparation software shall do for you, hope that you get a bigger, better & the best refund.