Updated Forms:  2012 W-4 Form  Rental Worksheet   Farm Worksheet    Itemized Deduction Worksheet   Business Professional Worksheet

2011 Tax Update

Added 11/22/2011

If you are going to be eligible to start receiving Social Security benefits, contact the Social Security Administration 3 months before your eligibility date. You may do so by calling 1-800-772-1213 or reduce processing time by applying online at www.ssa.gov . Click on “Apply Online for Retirement Benefits”.

YOUR TAX DEDUCTIONS:

1. The standard deduction for 2011 for a married couple filing a joint return is at $11,600; Single, $5,800; Head of Household, $8,500.
2. The personal exemption for 2011 is $3,700.
3. The reimbursement for Business mileage for 2011 is 51cents before July 1 and 55.5 cents for July 1 to December 31. Medical mileage is 19 cents before July 1 and 23.5 cents for July 1 to December 31. The mileage rate for charity is 14 cents for all of 2011.
4. The meal rate for truck drivers is $59 a day for 2011. Per diem rates may have changed depending on the area in which you have traveled.

HIGHLIGHTS OF TAX LAW CHANGES:

1. CAPITAL GAINS RATE:
The tax rate on long term Capital Gains and Qualified Dividends is zero (0)%, if you are in the 15% or lower bracket, and a maximum of 15% for 2011. These rates are in place until December 31, 2012.

2. DEPRECIATION CHANGE

The limit for Section 179 expense stays at $500,000 for 2011 . This amount is reduced if total assets placed in service exceed $2,000,000. First year Bonus Depreciation is 100% for qualified assets placed in service in 2011. To qualify the property must be new, have a depreciation life of 20 years or less and be purchased and placed in service in 2011.

3. 1099 REPORTING CHANGES.

Last year we told our business clients that expanded 1099MISC reporting requirements were going to start in 2011. Fortunately, most of the changes were repealed. Taxpayers that have rental properties are not required to file1099 forms for Services. Business clients do not have to issue1099 Forms for the purchase of goods. Corporations continue to be exempt from receiving 1099 Forms for most types of income.

4: NEW FORM: 1099-K.

There is a new 1099 form that many businesses will see for 2011. That is Form 1099K. This form will be issued by businesses, such as banks, that process credit and debit card transactions for customers. The form will also be issued by Third Party Payers such as Paypal. The 1099-K was supposed to be mandatory for 2011, but that was changed to 2012. Some payment processors may still issue the 1099-K for 2011. If your business receives a 1099K please include it with your tax information. The Gross income lines of certain forms have been changed to report the 1099-K amounts.

5. OTHER CREDITS:

The American Opportunity Credit is still in place for 2011. This credit is available for the first four years of postsecondary education. A smaller version of the Residential Energy Credit for energy efficient home improvements is available for 2011. This is for items such as insulation and windows. The larger credit for solar, geothermal and wind powerimprovements is the same as last year.

WHAT TO BRING TO YOUR TAX APPOINTMENT

1. Federal, state and local estimated payment vouchers.
2. W-2's, 1099's, SSA statement or business records if you are self-employed.
3. Social security cards for you, your spouse and dependents.
4. Date of birth for taxpayer, spouse and all dependents.

FROM PENNSYLVANIA …

Pennsylvania had several items to be aware of for 2011. PA will not allow the 100% bonus depreciation in 2011. The PA maximum Section 179 deduction is till limited to $25,000. Finally, Pennsylvania is adding a new section to the PA40 return for personal Use Tax. Use Tax occurs if an item that would be subject to PA Sales Tax is purchased without paying the PA Sales Tax. A common area for this to occur is with purchase of PA taxable items over the internet. The 2011 PA40 will have a line to self report any personal Use Tax incurred during the year. If you did not have any purchases subject to use tax you would report $0 on that line. If you did have any purchases covered by use tax we would need the total purchase price of all the items for the year to calculate the Use Tax. The amount is added to your PA tax for the year.