Some of the tax measures in effect through the Tax Relief Act of 2010 continued through 2011
Oakland, CA (PRWEB) February 24, 2012
Liberty Tax Service, Oakland's tax preparation specialist reviews 2011 expiring and filing tax measures. Liberty Tax offers this review for some of the more significant tax measures to keep in mind now and for future tax planning.
“Some of the tax measures in effect through the Tax Relief Act of 2010 continued through 2011. Be aware of tax deductions that are expiring, such as the Making Work Pay Credit,” Malkeet Singh of Liberty Tax Service said.
For tax measures expiring in 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.
Through 2011, taxpayers who itemize their deductions and live in a state without a state income tax may deduct their state sales tax or their state income tax, whichever is more advantageous.
Qualifying higher education expenses, such as tuition and fees paid for an individual, a spouse, or a dependent are again deductible as an adjustment on Form 1040. The allowable amount is up to $4,000. Also, 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.
Mortgage insurance premiums are deductible as interest through Dec. 31, 2011. Some home improvements made this year through Dec. 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.
For small business tax breaks in 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 startup expenses on their first tax return in 2011.
The Patient Protection Act increases the additional tax on non-qualified 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 Dec. 31, 2010.
For tax measures expiring in 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.
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.
For 2012, small businesses can expense up to $125,000 of the first $500,000 of business expenditures considered section 179 expenses.
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 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 percent remains in effect for 2011 and 2012.
For more information about tax preparation or Liberty Tax Service, call 510-239-5284 or visit the tax school on the web at http://www.libertytax.com. Liberty Tax Service is located at 3207 Grand Ave. in Oakland.
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.