Your 2011 Income Tax
by Milton Gugenheim
The following is a summary of topics for Tax Year 2011.
- The individual income tax rates will be same as the 2010 rates.
- The capital gains/dividends rates will be same as the 2010 rates.
- The marriage penalty relief will remain (twice the singular rate)
- The alternative minimum tax will remain the same as the 2009 rates.
- The 2011 return has to be filed by April 17, 2017 (Tuesday).
- Education credit –American Opportunity Education Credit. The coverage is now for four years and up to $2500 credit. See Publication (Pub) 17, page 235
- Qualified child definition - See Pub 17, see Index or Form 1040 Instructions (Inst 1040) Earned income credit (EIC) - The change includes a third child in some cases. Details on maximum income levels, etc. See Pub 17, page 238 or Inst 1040.
- Divorced or Separated Parents - new rules for claiming a non-custodial child. See Publication 17, see Index
- Child invested income - Not subjected to parent’s tax rate with invested income under $1900.
- Personal casualty or theft loss - limit is over $100. This is in addition to 10% of Adjusted Gross Income (AGI) limit that generally applies to the net loss.
- First home or replacement homebuyer credit - If home is bought before April 30, 2010 in some cases, you maybe able to claim credit. See Pub 17 page 257 for information..
- Standard mileage rate for 2011 - January 1- June 30, 2011 is 51 cents per mile business miles, medical travel is 19 cents and charitable travel is 14.0 cents .
July 1 –December 31, 2011 is 55.5 cents per mile business miles, 23.5 for medical and 14 charitable organizations For 2012, the standard mileage is 55.5 cents per mile.
- Electric vehicle credit – See Publication 17, page 184 for details.
- Credit for energy conservation saving item - Stoves, refrigerator, windows, heaters, A/C, etc. You will receive a manufacturers’ certificate when the qualified item is purchased. See Inst 1040.
- Retirement saving contribution credits- (IRA and Roth) - Traditional IRA – modified adjusted gross income (AGI)
- Roth IRA –No limit Also, half of any income that results from a rollover or conversion to a Roth IRA from another retirement plan in 2010 is included in income in 2011, and the other half in 2012, unless you elect to include all of it in 2010. See Publication 17, page 131 and Publication 590.
- Retired savings contribution credit - The limit has been raised to $27,000 single ($41,625 MFJ)
- Personal/Dependency Exemption is $3,700 for each exemption (income limit is $166,800 in addition, reduction is in effect)
- Standard Deduction MFJ - $11,600 (up $200) Head of Household - $8,500 (up $100) Single/MFS – $5,800 (UP $100) The additional standard deduction for the aged and blind will be $1,450 for singles and moves up to $1,150 for married taxpayers.
Capital Gains and Losses. Schedule D is no longer used as the input sheet, Form 8879 is the new input sheet. The sheet totals are transferred to Schedule D. Form 8879 is use to comply with the requirement that a broker is to report cost for a stock bought in 2011.The form has columns for uncovered stocks, those bought before January 1, 2011 and a columns for covered stock, stock bought in 2011. See Inst 1040, Section D for more details.
- Maximum Social Security Tax for Self Employed - is now $106,800 (6.2%). Medicare is taxed on all income (1.45%).
- Estate of decedents -. Consult a CPA or tax attorney for the best option.
- Earned Income Credit – See Form 1040 Instructions for qualifications and income limits. Investment income must be $3,150 or less for the year.
- Small Business – Schedule C - Required to file 1099 forms for a vendor proving $600 or more in service. Also must report credit card sales. in 012
Extended Tax Benefits for 2011 – Deductions for educator benefits
Tuition and fees deduction in figuring AGI
Itemized deductions for state and local general sales taxes
American Opportunity Tax Credit (Education credit)
Note: Form 1040 Instructions contain much of this same information.
See Publication 17 for detail information on each type of income and deductions.
It is free, very helpful, so use it.
1-800-629-1040 for information
1-800-629-3676 to order forms and publications
www.IRS.gov to obtain information and download forms and publications, etc. which are usually more current than commercial sources.
What’s New for 2012 Income Tax
- EIC - income credit limits have been raised
- IRA deduction increased for a person in a qualified retirement plan.
- Roth IRA income limits – raised to $120,000, single ($177,000 MFJ)
- Conversion to Roth IRA – no income limit required in 2010. Will be included in equal amounts in 2011 and 2012 income, or full amount in 2010 income.
- Mileage is 50 cents per mile. Others, no change.
- Maximum employee contribution to 401(k) and 403(b) is up by $500 to $17,000.
- Cost reporting of mutual funds and reinvesting-dividend plans holdings.
Expiring tax benefits:
Almost 70 tax provisions affecting businesses and individuals are set to expire on December 31, 2011. These provisions include the ability to: (1) make tax-free distributions from IRAs to qualified charities upon attaining age 70½, (2) deduct state and local sales taxes on your federal tax return, (3) deduct mortgage insurance premiums, and (4) claim numerous energy efficiency tax credits, among many others.
In 2001 and 2003, Congress enacted several tax cuts that are often referred to as the “Bush tax cuts” because they were enacted under the Bush administration. These tax cuts included:
- An increase in the child credit from $500 to $1,000
- Relief from the so-called marriage tax penalty
- A reduction in income tax rates from 15%, 28%, 31%, 36% and 39.6% to 10%, 15%, 25%, 28%, 33%, and 35%
- Repeal of the limitations on personal exemptions and itemized deductions
- Gradual repeal of the estate tax
- A maximum tax rate of 15% on long-term capital gains and qualified dividends
All of these tax provisions were set to expire in 2010, but they were extended for two years in a last-minute deal between congressional Republicans and President Obama. The 2010 deal also reduced the maximum estate tax rate to 35% and increased the exemption amount to $5 million per person. These tax provisions are now scheduled to expire on December 31, 2012.
Milton Gugenheim is a HAL-PC member and has been an AARP Tax Aide Instructor and Local Coordinator for over eighteen years. He may be contacted at firstname.lastname@example.org, but no tax advice.
NOTICE: This information is our best effort to provide you with current information.. If you have a particular or unique personal question, consult a qualified tax accountant or lawyer. Note: Even the IRS will not guarantee its own advice.