The projected 2012 tax brackets have been calculated along with the 2012 standard deduction projections.
Define the Standard Deduction
The IRS allows taxpayers the ability to reduce their taxable income by taking tax deductions. In general, a taxpayer can elect to take a standard deduction or itemize their deductions. A standard deduction is just how it sounds – it’s a standard amount that is set by the IRS, depending on your tax filing status (single, married jointly, etc). If a taxpayer is able to itemize enough deductions that allow them to exceed the standard deduction, it is usually in their best interest to itemize. If, however, a taxpayer doesn’t have enough itemized tax deductions to itemize, they can take the standard deduction. This allows lower income earners to essentially reduce their tax burden significantly.
The standard deduction works to lower your taxable income. By subtracting your personal exemption amount along with the standard deduction, you can calculate your taxable income. The amount of your standard deduction will depend on your filing status, age, and certain disabilities.
2012 Standard Deduction
|For married filing jointly||$11,600||$11,900|
|For heads of households||$8,500||$8,700|
|For married filing separately||$5,800||$5,950|
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