Changes to Note When Filing Your Taxes

by Emily on February 7, 2012

Due to political stagnation in Washington last year, there are not as many changes to the tax laws as there have been in years past. If you have not filed your federal income tax return for 2011, now is a good time to get started. This year there are only a few new forms for taxpayers to deal with, which will generally make this year’s tax return similar to those in years past.

The deadline this year to file your federal tax return and pay what you owe is April 17. We all typically think of the deadline as April 15, but this year April 15 is a Sunday and April 16 is a holiday in Washington DC. This date is the deadline for making 2011 contributions to your individual retirement account. If you wait till the last minute to file your taxes or forget about the deadline and need more time to file, you can fill out Form 4868, which is available on the IRS website- www.irs.gov. Filing out this form will give you an additional six months to file, until October 15, but you will not get additional time to pay any amount that you may owe.

If you take a deduction for the use of your car, van, pickup or panel truck, there are two different rates for the deduction. As a taxpayer, you can deduct the certain actual costs or use the IRS standard optional mileage rate. The IRS rate for the first six months of 2011, is 51 cents per mile. The IRS rate for the second half of 2011 is 55.5 cents per mile, which is higher to reflect the higher gas prices during the second half of 2011. The rate for deductible medical or moving expenses is 19 cents for the first half of the year and 23.5 cents for the second half. If you use your vehicle for a charitable organization, the rate for the deduction is 14 cents per mile.

A change this year is to the exemption level for the alternative minimum tax or AMT. The exemption level has increased in this tax system where certain deductions disappear and result in larger tax bills for some people. The levels for 2011 are:

$74,450 for a married couple who files a joint return and qualifying widows and widowers, which increased from $72,450 last year.

$37,225 for a married person filing separately, up from last year $36,225.

$48,450 for single and head of households, up from last year $47,450.

You as a taxpayer can either choose to take the standard deduction, or t can itemize deductions on Schedule A. For 2011, the basic standard deduction amount is $11,600 for married couples filing jointly. For singles, or for a married person filing separately, it’s $5,800.

There are additional amounts for older taxpayers (those born before Jan. 2, 1947), or those who are blind or both. You should not automatically choose the standard deduction without checking to see whether you might be better off by itemizing the deductions.

Those who are employed as teachers, counselors, principals or school aides who worked at least 900 hours during the school year in a school that provides elementary or secondary education can deduct up to $250 of school supplies that they purchased out of their own pockets for use in their classroom. Items that qualify for the deduction include books, supplies and computer equipment. They are eligible for this deduction even if they take the standard deduction.

There is a new law regarding investments called cost based reporting. This system is for taxpayers to report accurately capital gains and losses. You will now get a 1099-B form that shows the cost of your stock and the gross proceeds. This new law only applies to a limited class of securities such as corporate stock that was both purchased and sold in 2011. The rules do not apply to stock sold in 2011, but bought before 2011. The rules also do not apply to mutual fund transactions during 2011, or stocks that were bought in connection with a dividend reinvestment plan. You should use the new Form 8949 to report capital gains and losses for 2011, using Schedule D.

Now that you are familiar with the tax law changes for 2011, you should go file your federal tax return, so you can avoid penalties and late fees. Whether you pay to have your taxes done by a professional or do them yourself, now is the time to prepare all your documentation and file.

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Emily

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