2011 federal tax law
changes
This
list is a brief summary of the changes that may apply to your 2011 tax return. Please understand this list is in no way intended
to be all-inclusive, so feel free to contact me if wish
to discuss a specific change that you think may apply to you.
-income tax rates remain the same, however the brackets are adjusted for inflation.
-you have until 4/17/12 to file
your individual income tax return, 10/15/12 if you file an extension.
-exemption allowances and itemized deductions are not clipped affluent taxpayers, however this
is just a one year reprieve.
-rates
remain at historic lows for both long term capital gains and dividends. brokers are now obligated to report to you (and the IRS) the original cost basis (your adjusted purchase
price) when the asset is sold. resulting gains and losses are now reported on (new) form 8949 and carried to the schedule
D.
-standard deduction for most and
exemption amounts for all have increased slightly, adjusted for inflation.
-there remains a smaller energy tax credit for homeowners, so if you have used
this in prior years you must consider the amounts taken.
-the 'making work pay' credit is gone, replaced by the reduction
of 2% in the employees portion of Social Security taxes, which has been extended into 2012. self-employed taxpayers will receive
a similar cut when filling out schedule SE.
-standard mileage rates continue to be a moving target, thanks to the roller coaster nature of oil prices. for business
miles driven during the first six months of 2011 the rate is $.51/mile and $.555/mile for the second six months of 2011. rates
for medical and/or moving are $.19/mile for the first six months, $.235 for the second six months, and rates for charitable
miles remain at $.14 all year.
-roth
rollovers taken in 2010 and elected not to be taxed then will begin to be taxed-50% in 2011 and 50% in 2012. the income limit
for traditional ira to roth ira conversions has been permanently removed, however these are now taxed 100% in the year of
the conversion.
-if you have
foreign assets, depending on the amount and type, you may be required to file (the new) form 8938, which is in addition to the FBAR reporting requirements on schedule B.
-medical flexible spending accounts are not so flexible.
the rule which allowed over-the-counter items (with a few
exceptions) to be purchased with pre-tax dollars has been removed, so you will need a prescription now to purchase these items.
also, penalties for non-qualified distributions from MSA's and HSA's have increased to 20%.
-repayment of first-time homebuyer credit continues, and the form 5405 is no
longer required for most repayments. for certain individuals, you may still qualify for the first-time homebuyer credit if
you bought a home in 2011.
