January 7, 2012
Tax return for married couples
- For the year 2012, the annual deductible amounts for Medical Savings Accounts (MSAs) have been increased from the tax year 2011 amounts; as below:
| Medical Savings Accounts (MSAs) | Self-only coverage | Family coverage |
| Minimum annual deductible | $2,100 | $4,200 |
| Maximum annual deductible | $3,150 | $6,300 |
| Maximum annual out-of-pocket expenses | $4,200 | $7,65 |
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
The American Opportunity Tax Credit
• is worth up to $2,500
• for those single filers that income is less than $80,000 (partial credit for income between $80,000 - $90,000) and for joint filers that income is less than $160,000 (partial credit for income between $160,000 - $180,000).
• the first $2,000 for qualified tuition and related expenses is 100%; and
• the next $2,000 for qualified tuition and related expenses is 25%.
• for parents claiming the dependent student or for student that is not claimed as a dependent
• 40% of the credit is refundable
Education Tax Credit is important and beneficial for both parent and student.
The Lifetime Learning Credit
• is worth up to $2,000
• for those single filers that income is less than $48,000 (partial credit for income between $48,000 - $58,000) and for joint filers that income is less than $96,000 (partial credit for income between $96,000 - $116,000).
• the first $10,000 for qualified tuition and related expenses is 20%
• for parents claiming the dependent student or for student that is not claimed as a dependent
• can be used for college tuition at any level (part-time, also)
The Tuition and Fees Deduction
There are two options how you can claim this deduction. It’s either by education tax deduction or college tuition tax credit. But if you choose the education tax deduction instead of college tuition tax credit.
• it is worth up to $4,000 off your income
• for those single filers that income is less than $80,000 and for joint filers that income is less than $160,000.
• for parents claiming the dependent student or for student that is not claimed as a dependent
• it can only be used to tuition and fees, other expenses is not included (like room and board)
The college tax deduction is only used when the income is too high for higher education tax credit. While, school tax credit reduces the amount of taxes you paid and your income was reduced by education tax deduction.
