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Toledo Accountants.net
Tax Talk for 2011 Presenter: Charlie Finley
FILING BASICS
Sections of Form 1040
Total Income Adjustments (Not available on
1040EZ) Adjusted Gross Income Itemized or Standard
Deduction/Exemptions Taxable Income Tax Non Refundable Credits Payments, Refundable Credits Refund or Balance Due
MAJOR SCHEDULESSch- A (Itemized Deductions)Sch- B (Interest and Dividends)Sch- C (Self employed Income)Sch- D Cap Gains Income)(Sale of Stock and Personal Prop)Sch- E (Rental Prop and Royalties)Sch- F (Farm Income)Sch- EIC (Earned Income Credit)Sch- R (Credit for the Elderly)Sch- SE (Self employment Tax)
Standard Deduction and Exemption
Standard Deduction (2011)
Single or Married Filing Separate–$5,800
Married Filing Joint or Qualifying Widow(er)–$11,600
Head of Household–$8,500
Personal Exemption: $3,700 (with NO Phase-out for Income)
Increased Standard Deduction
Taxpayers who are age 65 or older and/or blind are entitled to the following increased standard deduction amounts:
– $1,450 (per condition) for singles and heads of households
– $1,150 (per condition) for all married taxpayers and qualifying widow(ers)
WHAT’S NEW FOR 2011
INDIVIDUALS
• Tax Rates• Marriage Penalty Relief• Limitations on Itemized Deductions and Personal
Exemptions• Small “Extenders”• Mortgage Insurance Premiums• Child Tax Credits• Earned Income Tax Credit• Education Credits• Non Business Energy Property Credit• AMT Patch• Payroll Tax Holiday
2011 TAX RATES
2011 Federal Tax Rate Single MFJ
Standard Deduction $5,800 $11,600
10% $8,500 $17,000
15% $34,500 $69,000
25% $83,600 $139,350
28% $174,400 $212,300
33% $379,150 $379,150
35% $379,151+ $379,151+
MARRIAGE PENALTY RELIEF
• Provision that extends the Standard Deduction for couple filing MFJ to twice that of unmarried individual filing single.
• Provision extended for two years (2011, 2012)
• Otherwise, rules from 2000 would have applied, making MFJ filing status more costly and unfair.
ITEMIZED DEDUCTIONS/PERSONAL EXEMPTIONS PHASEOUTS
• Completely repealed for 2011 and 2012. The phase-out provisions would have been re-instated after 2010.
• Taxpayers can still get their full Itemized deduction and Personal Exemption amounts regardless of income.
SMALL “EXTENSIONS”
• Tuition and Fees Deduction• Educator Expense Deduction• State and Local Sales Tax Deduction• Qualified Charitable Distributions from IRAs
Extended for 2010 and 2011
MORTGAGE INSURANCE PREMIUMS
• Mortgage Insurance Premiums paid by Taxpayer on a qualified mortgage may be deducted as mortgage interest on Sch. A, subject to phase-out based on Taxpayer’s AGI.
Extended for 2010 and 2011
CHILD TAX CREDIT
• Maximum CTC for each qualified child will remain at $1,000.
• Provision allowing refundability of the credit for earned income over $3,000 has also been extended.
• Phase out of CTC begins at $110,000 (MFJ) $75,000 (Single, HOH) $55,000 (MFS)
Extended for 2011, 2012
EARNED INCOME TAX CREDIT
Same criteria as 2010 were extended for 2011, 2012
EDUCATION CREDITS
• American Opportunity Credit was extended. Credit is partly refundable up to $2,500 per student, for qualified expenses for first 4 years of College.
• Coverdell Savings Account- Maintains $2,000 contribution limit.
• Student Loan Interest Deduction- Adjustment of up to $2,500 of qualified interest. Includes repeal of 60 month time limit.
Extended for 2011 and 2012
NON BUSINESS ENERGY PROPERTY CREDIT
• Extended for one year the credit for Energy Saving Home Improvements. (Windows, Insulation, Furnaces) However…
• Credit is now limited to $500 (not $1,500) with window credit limited to $200
Extended for 2011
AMT PATCH
• $48,450 exemption for Single and HOH• $74,450 exemption for MFJ• Allows some non refundable personal tax credits
for AMT (dependent care credit, non business energy property credit, lifetime learning credit)
• Unless extended, AMT limits go back to those from 2000.
• AMT is still broken.
Extended for 2011
PAYROLL TAX HOLIDAY
• Reduction in the “Employee Only” portion of Social Security Tax.
• Reduced from 6.2% to 4.2% on first $106,800 of income.
• SE tax reduced from 12.4% to 10.4%.• Maximum reduction is $2,136.
Effective for 2011 only
WHAT WAS NOT EXTENDED…
Beginning in 2010 Tax Year, there is no more:
• Increased Standard Deduction for Real Estate Tax• First Time Home Buyer’s Credit• New Vehicle Sales Tax Deduction• Unemployment Compensation Exemption of $2,400• Required Minimum Distribution Waiver
Beginning in 2011 Tax Year, there is no more:
• Making Work Pay Credit ($400 Single, $800 MFJ)• Alternative Motor Vehicle Credit
