EITC Due Diligence Penalty Increase

The penalty for paid tax preparers who fail to comply with the EITC due diligence procedures has increased dramatically in 2012 (from $100 to $500 per occurence). Any returns currently under audit for 2010 and earlier are not affected.

Standard Deduction for Non-Dependents

Standard Deduction for Dependents

Personal and Dependent Exemptions

The personal and dependent exemption amount for 2011 is $3,700.

Adoption Credit

The maximum adoption credit for 2011 is increased to $13,360. An employee may exclude from income up to $13,360 in adoption benefits under an employer-sponsored adoption-assistance program.

Education Credits

The American Opportunity Credit (AOC) has a maximum of $2,500, is available for the first four years of college, allows textbooks and other course materials as qualifying expenses, and is 40% refundable (up to $1,000) unless claimed by a child subject to the kiddie tax.

MAKING WORK PAY CREDIT

The Making Work Pay credit is no more available in Tax Season 2012. This means no schedule M is needed on the 2011 tax returns.