Filing
Status

If the taxpayer's filing status is:

The standard deduction is:

If 65 or over AND/OR blind add for EACH

$5,950

$11,900

$1,150

$5,950

$8,700

Nonresident Aliens
An individual who is a nonresident alien for any part of the tax year is not eligible for the credit unless he or she is married and an election is made by the couple to have all of their worldwide income subject to U.S. income tax.

Tax Year

$100 Rule

10% Rule

Apply this rule separately to each spouse.

Apply this rule as if you were one person.

Apply this rule separately to each spouse.

Filing separate IRS tax return

You CAN deduct the following...

You CANNOT deduct the following...

• Admission and transportation to a medical conference relating to the chronic disease of a dependent, if it is primarily for and essential to the care of the dependent 
• Birth control pills prescribed by your doctor
• Capital expenses for equipment or improvements to your home needed for medical care, or to make the home suitable for a disabled person. (See IRS tax Publication 502)
• Cost and care of guide dogs or other animals aiding the blind, deaf or disabled.
• Cost of lead-based paint removal (See IRS tax Publication 502)
• Dental and orthodontic care
• Expenses of an organ donor.
• Hospital services fees (lab work, therapy, nursing services, surgery, etc.)
• Legal abortion
• Legal operation to prevent having children.
• Meals and lodging provided by a hospital during medical treatment.
• Medical, hospital, dental and long-term care insurance premiums (subject to the age limits) (See IRS tax Publication 17 for details).
• Medical services fees (from doctors, dentists, surgeons, specialists, and other medical practitioners.)
• Medicare A premiums for persons not enrolled in Social Security, and Medicare B premiums
• Oxygen equipment and oxygen
• Part of life-care fee paid to retirement home designated for medical care.
• Prescription medicines (those requiring a prescription by a doctor for their use by an individual) and insulin.
• Psychiatric care at a specially equipped medical center (includes meals and lodging.)
• Social Security tax, Medicare tax, FUTA, and state employment tax for worker providing medical care (See Wages for nursing services below.)
• Special items (artificial limbs, false teeth, eyeglasses, contact lenses, hearing aids, crutches, wheelchairs, braces, etc.)
• Special school or home for mentally or physically disabled persons (see IRS tax Publication 502 for details).
• Stop smoking programs, including cost of prescription drugs designed to alleviate nicotine withdrawal.
• Transportation for needed medical care at the IRS published rate per mile, or actual out-of-pocket expenses, plus parking fees and tolls. (See IRS tax Publication 17 for details).
• Treatment at drug or alcohol center (includes meals and lodging provided by the center.)
• Wages for nursing services ( see IRS tax Publication 502)
• Weight-loss programs to treat obesity and other diseases diagnosed by a physician

• Diaper service
• Diet foods
• Expenses for your general health (even if following your doctor's advice. However if you doctor has recommended a program as treatment for a specific condition, the IRS has indicated that the cost would be deductible) such as

- Health club dues
- Household help (even if recommended by a doctor.)
- Social activities, such as dancing or swimming lessons.
- Trip for general health improvement.
- Weight loss program.

• Funeral, burial or cremation expenses.
• Illegal operation or treatment.
• Life insurance or income protection policies, or policies providing payment for loss of life, limb, sight, etc.
• Maternity clothes
• Meals and lodging while attending a medical conference related to the chronic disease of a dependent
• Medical expenses paid from a medical savings account (MSA).
• Medical expenses paid from a flexible savings account (FSA)
• Medical insurance included in a car insurance policy covering all persons injured in or by your car.
• Medical insurance premiums paid with pre-tax dollars
• Medicine you buy without a prescription.
• Nonprescription drugs or medicines.
• Nonprescription nicotine gum, patches, or lozenges.
• Nursing home policies, if the policy ensures a maximum out-of-pocket expense per day.
• Babysitting, childcare, and nursing care for a healthy baby.
• Payroll tax paid for Medicare A.
• Surgery for purely cosmetic reasons.
• Toothpaste, toiletries, cosmetics, etc.

• Accounting fees for record keeping;
• Expenses of proxy fights when legitimate corporate policies are involved;
• Fees for collecting taxable interest and dividends;
• Fees shown in Box 5 of Form 1099-DIV;
• Guardian fees of a minor incurred in collecting or producing income;
• Investment manager and planner fees to the extent that they relate to taxable income;
• IRA setup and administration fees;
• Legal fees;
• Premiums for indemnity bonds for replacing missing securities;
• Safe deposit box fees used exclusively to hold taxable income generating securities and investments;
• Salaries of persons hired to keep records of your taxable investment income; and
• Subscriptions to investment services.

• The first reduces the amount that can be expensed on the  tax return under this section if taxpayers acquire more than $2,000,000 in Section 179 eligible property during the tax year. The available $500,000 tax deduction is reduced dollar for dollar for each dollar of Section 179 property placed in service during the tax year above $2,000,000. If $2,500,000 of Section 179 property is placed in service the available tax deduction is $0.
• The second limitation is that Section 179 expense cannot be greater than the net income generated by the business for which the property was acquired.

• Be your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, OR a descendent of any of them such as a niece or grandchild; and
• Be under age 19 - or age 24 if a student - or any age if permanently and totally disabled; and
• Have lived with you for more then one-half of the year. Exceptions apply for parents divorced or separated during the year and for children supported by two or more taxpayers.
• You provided over one-half of his/her support.

• Be a U.S. citizen or national, a resident alien, or resident of Mexico or Canada; and
• Not be married. If the dependent is married he cannot file a joint return unless the return is to claim a refund and no tax liability would exist for either spouse had they filed separately; and
• Not be claimed as a dependent on someone else's return.

• He/she is a person other than a spouse who lived in your home all year as a member of your household if the relationship did not violate the law and the two criteria above are met; and
• He/she is not a qualifying child of another taxpayer for the year; and
• He/she had gross income of less that $3,800; and
• You provided over one-half of his/her support.

• Unearned income was more than $950
• Earned income was more than $5,950
• Total earned and unearned income was more than the larger of $950 or earned income up to $5,650 plus $300.

• Unearned income was more than $2,400 ($3,850 if 65 or older or blind)
• Earned income was more than $7,400 ($8,850 if 65 or older or blind)
• Gross income was more than the larger of $2,400 ($3,850 if 65 or older or blind) OR your earned income was $5,650 plus $1,750 ($3,200 if 65 or older or blind)

• Gross income was at least $5 and the spouse files a separate return and itemizes deductions
• Earned income was more than $5,950
• Unearned income was more than $950
• Total earned and unearned income was more than the larger of $950 or earned income up to $5,650 plus $300.

• Unearned income was more than $2,100 ($3,250 if 65 or older or blind)
• Earned income was more than $7,100 ($8,250 if 65 or older or blind)
• Gross income was at least $5 and your spouse files a separate return and itemizes deductions
• Gross income was more than the larger of $2,100 ($3,250 if 65 or older or blind) or your earned income was $5,650 plus $1,450  ($2,600 if 65 or older or blind)

If the child is under age 19 and there is investment income of $1,900 or more and  Form 8814 is not filed, the child must file a tax return and include Form 8615.

Maximum Allowable Child and Dependent Care Tax Credit

Qualifications:
The child must be a dependent under age 17 AND -
1. A son, daughter, stepchild, adopted/foster child, brother, sister, stepbrother, stepsister, or a descendent of any of them (i.e. grandchild).
2. Any age if permanently disabled.
3. The child did not provide more than one half of his own support.
4. The child must be a citizen or resident alien.

If there are three or more children an additional refundable credit may be possible even if no tax is owed.

$7,000.00

• $58,000 if the taxpayer's filing status is single, head of household, or married filing separately and he lived apart from his spouse for all of 2012;
• $92,000 if the taxpayer's filing status is married filing jointly and both the taxpayer and spouse are active plan participants, or the taxpayer is a qualifying widow or widower;
• $92,000 if the taxpayer's filing status is married filing jointly and the taxpayer is active plan participant but the spouse is not. The spouse uses the $173,000 threshold;
• $173,000 if the taxpayer's filing status is married filing jointly and the taxpayer was not an active plan participant but the spouse was. The spouse uses the $92,000 threshold; and
• $0 if the taxpayer's filing status is married filing separately and he lived with the spouse at any time in 2012.

These limits will rise through 2013. 

The tax deduction
phases out at...

No tax deduction
is allowed at...

• $200,000
• 100% of the average taxable compensation for the highest three consecutive years, not to exceed $250,000

A nonrefundable credit is available for contributions to retirement savings plans. The credit is in addition to the deduction (or income exclusion) of the contribution. The credit is equal to the applicable percentage (based on income and filing status), times qualified retirement plan contributions (not to exceed $2,000 of contributions - resulting in a maximum credit of $1,000 at a 50% credit rate).

Credit Phaseout - Modified Adjusted Gross Income

Contributions to a qualified retirement plan must be made by an eligible individual, defined as:

• At least 18 years of age at year end
• Not a dependent of another taxpayer, and
• Not a student (generally full time)

Nontaxable:
Social Security,
Pensions, Retirement
Disability less than:

and AGI less than:

• taxpayer must be in a qualified high deductible medical insurance plan
• taxpayer must not be covered under another health plan or enrolled in Medicare Parts A or B
• taxpayer cannot be claimed as a dependent

Type of Benefit

General Rule

Mail Form 8453, U.S. Individual Income Tax Transmittal for an IRS e-file Return, to the following address:

Internal Revenue Service
ATTN: Shipping and Receiving, 0254
Receipt and Control Branch
Austin, TX 73344-0254

File Form 8453 only if you are attaching one or more of the following forms or supporting documents:

• Appendix A, Statement by Taxpayer Using the Procedures in Rev. Proc. 2009-20 to Determine a theft Loss Deduction Related to a Fraudulent Investment Arrangement
• Form 1098-C, Contributions of Motor Vehicles, Boats, and Airplanes (or equivalent contemporaneous written acknowledgement)
• Form 2848, Power of Attorney and Declaration of Representative (or POA that states that the agent is granted authority to sign the return)
• Form 3115, Application for Change in Accounting Method
• Form 3468, attach a copy of the first page of NPS Form 10-168a, Historic Preservation Certification Application (part 2 - Description of Rehabilitation), with an indication that is was received by the Department of the Interior or the State Historic Preservation Officer, together with proof that the building is a certified historic structure (or that such status has been requested)
• Form 4136, attach the Certificate for Biodiesel and if applicable, Statement of Biodiesel Reseller or a certificate from the provider identifying the product as renewable diesel and, if applicable, a statement from the reseller
• Form 5713, International Boycott Report
• Form 8283, Noncash Charitable Contributions, Section A, (if any statement or qualified appraisal is required) or Section B, Donated Property, and any related attachments (including any qualified appraisal or partnership Form 8283)
• Form 8332, Release of Claim to Exemption for Child of Divorced or Separated Parents (or certain pages from a post-1984 decree or agreement, see instructions)
• Form 8858, Information Return of U.S. Persons With Respect to Foreign Disregarded Entities
• Form 8864, Biodiesel and Renewable Diesel Fuels Credit - Attach the Certificate for Biodiesel and, if applicable, Statement of Biodiesel Reseller or a certificate from the provider identifying the product as renewable diesel and, if applicable, a statement from the reseller
• Form 8885, Health Coverage Tax Credit, and all required attachments
• Schedule D-1, Continuation Sheet for Schedule D (Form 1040) (or a statement with the same information, if you elect not to include your transactions on the electronic short-term capital gain (loss) or long-term capital gain (loss) records

5% per month of the net tax due (maximum 25%)

15% per month of the net tax due (maximum 75%)

0.5% per month of the unpaid tax due (maximum 25%) The 0.5% rate increases to 1% after the  IRS issues a notice of intent to levy.

20% of tax underpayment

75% of tax underpayment

Determine the taxpayer's taxable income from Form 1040 Line 43 and in the far left column of the appropriate schedule for the taxpayer's filing status locate his income bracket. The percentage figure in the third column to the right  titled "The tax is:" shows the taxpayer's tax bracket.

CAUTION: You should only use the schedules below to determine the taxpayer's tax due if the taxpayer's taxable income (Form 1040, Line 43) is $100,000 or more. Even though you cannot use the tax rate schedules below if the taxpayer's taxable income is less than $100,000, all levels of taxable income are shown so you can see what the taxpayer's tax bracket is.