Gail Dean Kolesar CPA LLC

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Who Should File a 2012 Tax Return?

Who Should File a 2012 Tax Return?

If you received income during 2012, you may need to file a tax return in 2013. The amount of your income, your filing status, your age and the type of income you received will determine whether you’re required to file. Even if you are not required to file a tax return, you may still want to file. You may get a refund if you’ve had too much federal income tax withheld from your pay or qualify for certain tax credits.

You can find income tax filing requirements on IRS.gov. The instructions for Forms 1040, 1040A or 1040EZ also list filing requirements. The Interactive Tax Assistant tool, also available on the IRS website, is another helpful resource. The ITA tool answers many of your tax law questions including whether you need to file a return.

Even if you’ve determined that you don’t need to file a tax return this year, you may still want to file. Here are five reasons why:

1. Federal Income Tax Withheld.  If your employer withheld federal income tax from your pay, if you made estimated tax payments, or if you had a prior year overpayment applied to this year’s tax, you could be due a refund. File a return to claim any excess tax you paid during the year.

2. Earned Income Tax Credit.  If you worked but earned less than $50,270 last year, you may qualify for EITC. EITC is a refundable tax credit; which means if you qualify you could receive EITC as a tax refund. Families with qualifying children may qualify to get up to $5,891 dollars. You can’t get the credit unless you file a return and claim it. Use the EITC Assistant to find out if you qualify.

3. Additional Child Tax Credit.  If you have at least one qualifying child and you don’t get the full amount of the Child Tax Credit, you may qualify for this additional refundable credit. You must file and use new Schedule 8812, Child Tax Credit, to claim the credit.

4. American Opportunity Credit.  If you or someone you support is a student, you might be eligible for this credit. Students in their first four years of postsecondary education may qualify for as much as $2,500 through this partially refundable credit. Even those who owe no tax can get up to $1,000 of the credit as cash back for each eligible student. You must file Form 8863, Education Credits, and submit it with your tax return to claim the credit.

5. Health Coverage Tax Credit.  If you’re receiving Trade Adjustment Assistance, Reemployment Trade Adjustment Assistance, Alternative Trade Adjustment Assistance or pension benefit payments from the Pension Benefit Guaranty Corporation, you may be eligible for a 2012 Health Coverage Tax Credit. Spouses and dependents may also be eligible. If you’re eligible, you can receive a 72.5 percent tax credit on payments you made for qualified health insurance premiums.

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Tax tables, other inflation adjustments, issued for 2013

On Friday, the IRS issued Rev. Proc. 2013-15, which contains
inflation-adjusted items for 2013, as well as the new income tax rate
tables now in effect as a result of the American Taxpayer Relief Act of
2012, P.L. 112-240 (the Act). In October 2012, when the IRS issued its
usual end-of-the-year inflation
adjustment revenue procedure (Rev. Proc. 2012-41), it noted that many of
the items normally included would have to wait until Congress acted.
This release contains many of those items.

Among the inflation-adjusted amounts that have increased are the personal
exemption, which increased from $3,800 in 2012 to $3,900 for 2013, and
the standard deduction, which for married filing jointly status
increased from $11,900 in 2012 to $12,200 in 2013. In addition, the
adoption credit under Sec. 23 is inflation-adjusted from $12,650 in 2012
to $12,970 in 2013.

The revenue procedure also contains the  inflation-adjusted unified credit against the estate tax, which is $5.25  million for 2013.

The AMT exemption amount for 2013 is $80,800
for married taxpayers filing joint returns and $51,900 for single
taxpayers. The American Taxpayer Relief Act set the 2012 exemption
amounts at $78,750 for married taxpayers filing jointly and $50,600 for
single filers and indexed the numbers for inflation, so Congress will no
longer have to pass annual AMT “patches.”

The revenue  procedure provides the beginning income levels for the limitation on
certain itemized deductions and the beginning income levels for the
phaseout of personal exemptions, which were reinstated by the Act. It
also includes the 2013 amounts for the child tax credit; the Hope
scholarship, American opportunity, and lifetime learning credits; the
earned income credit; and the phaseout limits for interest paid on
qualified education loans.

One curious item in the  revenue procedure is the inclusion of the amount for the qualified
transportation fringe benefit for 2012. The Act retroactively reinstated
parity between the benefits for parking and for transportation in a
commuter highway vehicle or a transit pass for 2012 at $240 a month,
which the IRS notes in the revenue procedure. However, as a practical
matter, taxpayers have received their benefits for 2012, and it is
unclear what the mechanism would be to refund the tax paid on amounts
that would have been excluded from income under the higher $240 a month
level.