Virginia Beach,VA (PRWEB) January 09, 2012
With fresh New Year’s resolutions to save money on taxes still top of mind, there are many tax measures to review that may apply for 2011 and/or 2012 filing. Liberty Tax offers this review of some of the more significant tax measures to keep in mind now, and for future planning.
“Some of the tax measures in effect through the Tax Relief Act of 2010 continued through 2011. Be aware of tax deductions that have expired, such as the making Work Pay Credit,” said John Hewitt, CEO of Liberty Tax Service.
Expired in 2011
Current Alternative Minimum Tax (AMT) Amounts: There were no last minute changes or surprises for the Alternative Minimum Tax Credit. Through 2011, taxpayers paying the AMT who are eligible for tax credits can still claim the credits to offset their AMT bill. These include credits for child and dependent care expenses, elderly or disabled, education, and mortgage interest. For 2011, the AMT exemption amounts are $48,450 for unmarried individuals and $74,450 for a married couple filing jointly.
State and local sales tax deduction: Through 2011, taxpayers who itemize their deductions and live in one of the states without a state income tax may deduct their state sales tax or their state income tax, whichever is more advantageous.
Tuition and fees deduction: Qualifying higher education expenses such as tuition and fees paid for yourself, a spouse, or a dependent are again deductible as an adjustment on Form 1040. The allowable amount is up to $4,000.
Educators’ $250 deduction for supplies: Through 2011, eligible educators who have spent their own money for qualified classroom supplies can deduct up to $250 as an adjustment on Form 1040, regardless of whether they are able to itemize deductions. Any amount exceeding $250 may be claimed as an itemized deduction.
Deductible Interest Includes Mortgage Insurance Premiums
Mortgage insurance premiums are deductible as interest through December 31, 2011.
Residential energy credit for 2011: Some home improvements made through December 31, 2011 to a primary existing home qualify for a deduction of up to $500. These include insulation, metal and asphalt roofs, non-solar water heaters, and windows and doors. The credit is reduced by any residential energy credit taken after 2005.
Small Business Tax Breaks
Section 179 Expenses
For 2011, small businesses can expense up to $500,000 of the first $2 million of business expenditures considered section 179 expenses.
New businesses can deduct up to $10,000 in start-up expenses on their first tax return in 2011.
Mileage Deductions for 2011 and 2012:
- Business mileage:
2011: 51 cents per mile, January 1-June 30, 2011 and 55.5 cents July 1-December 3,2011. Also 55.5 cents for 2012.
- Medical or moving mileage:
2011: 19 cents per mile January 1-June 30, 2001, 23.5 cents per mile July 1-December 31, 2011, and 23 cents per mile for 2012.
2012: (we can add)
- Charitable mileage: 14 cents per mile for 2011 and 2012.
An Increase on the Tax for Non-Qualified Distributions from HSA
The Patient Protection Act increases the additional tax on nonqualified distributions from health savings accounts (HSAs) from 10 percent to 20 percent and from Archer MSAs from 15 percent to 20 percent effective after tax year December 31, 2010.
Expiring in 2012
Write off Full Amount of Itemized Deductions Through 2012
Taxpayers who itemize their deductions can deduct the full amount of their itemized deductions regardless of their adjusted gross income through 2012. Taxpayers can also deduct the full amount for exemptions, with no income restrictions or phase-outs through 2012
American Opportunity Tax Credit Continues Through 2012
The American Opportunity Credit is available again in 2011 and 2012 for taxpayers claiming higher education costs including required course materials. The credit will allow the taxpayer to claim up to $2,500 of the cost of college tuition and related expenses.
Section 179 Expenses Decrease
For 2012, small businesses can expense up to $125,000 of the first $500,000 of business expenditures considered section 179 expenses
Break for Short Sales and Home Foreclosures
Homeowners experiencing “short sales” and foreclosures will get a break for “debt-forgiveness” tax consequences. Instead of treating cancellation of debt as taxable income on the foreclosure of a principle home, no taxes will be levied on discharges of indebtedness of up to $2 million dollars for married taxpayers filing jointly and of up to $1 million dollars for a married taxpayer filing a separate return through tax year 2012.
The maximum individual capital gain tax rate of 15% remains in effect for 2011 and 2012.
About Liberty Tax Service
Liberty Tax Service is the fastest-growing retail tax preparation company in the industry’s history. Founded in 1997 by CEO John T. Hewitt, a pioneer in the tax industry, Liberty Tax Service has prepared over 9,000,000 individual income tax returns. With 42 years of tax industry experience, Hewitt stands as the most experienced CEO in the tax preparation business, having also founded Jackson Hewitt Tax Service.
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Contact: Representatives of Liberty Tax Service are available to discuss the latest tax changes and to make presentations to local groups who might be interested in learning more.