New Tax Laws and Changes For
the 2011 Tax Year
As always, there are changes to the tax laws each year. Here are the ones that affect most taxpayers.
Taxable Income Brackets for 2011 Tax Year (after
exemptions and deductions)
(*includes Qualifying widow(er) with dependent child)
EXAMPLE OF TAX CALCULATION:
A couple filing Married/Joint has $100,000 in gross income with $70,000 in
taxable income after exemptions and deductions. The first $17,000 is taxed
at 10% ($1,700). The income from $17,001to $69,000 is taxed at 15% ($7,800).
The income from $69,001 to $70,000 is taxed at 25%
($250).
The total Federal tax would be $1,700+$7,800+$250=$9,750,
or an overall tax rate of 9.75% on the couple’s gross income of $100,000.
Exemptions and Standard Deductions
The exemption amount for yourself and dependents this year has increased from
$3,650 to $3,700 each. The standard deduction for a Married/Joint return
or qualifying widow(er) with dependent child is $11,600, up from $11,400.
Head of Household is $8,500, up from $8,400, Single and Married/Separate is
$5,800, up from $5,700. There is an increased standard deduction for being
age 65 or older, and if over 65 and blind for non-itemizers. These
increases in the exemption and standard deduction rates equate to paying less
federal tax.
Standard Mileage Rate for Businesses
I wish Congress would quit doing this.
It’s
a real pain for both of us at tax time.
There
are two mileage rates for 2011.
The rate for the first six months is 51cents per
mile.
The rate for the last six months is 55.5 cents per mile.
You need to figure the total business miles you
drove from January to the end of June, and then July 1st
through the end of the year.
My organizer has a place for both.
Please fill out the organizer for your vehicle
mileage before our appointment.
Medical and Moving Mileage Allowance
There are two tax rates for these also: 19 cents
per mile for the first six months, and 23.5 cents per mile for the last six
months.
Please fill out my organizer and indicate the two mileage
totals if you have medical and/or moving miles.
To deduct moving expenses, you must have moved, and
changed jobs with a distance of more than 50 miles from the old residence.
Charitable mileage is unchanged at 14 cents per
mile.
Lower Social Security Tax
The 2011 rate for the employee’s share of Social
Security tax was 4.2%.
This means you paid 2% less SS tax than you did in
2011.
I guess you can count that as your stimulus credit for the
year.
Estate Tax was Reinstated
Don’t worry too much.
The first $5 million in assets is exempt from estate
tax for those dying in 2011 and 2012.
Revised Home Energy Credit
Those of you who took advantage of the 30% credit
with a maximum of $1,500 did very well last year.
Nothing lasts forever (except taxes of course).
The maximum credit is now 10% of the purchase price
with a $500 maximum credit.
If you received any energy credits in years past,
those amounts will be subtracted from the $500, which could very well leave you
with a grand total of no credits.
First-Time Homebuyer Credit
For 2011, this only applies to members of the
armed forces who served overseas and bought a home before May 1, 2011.
Let me know if you qualify.
Traditional and Roth IRAs
The maximum contribution amount for 2011 is still
$5,000 for those under age 50 and $6,000 for us old folks.
If you’re interested in contributing to either of
the IRAs, please let me know and I can see if you qualify for either one.
You’ll have until 17 April, 2012 to make your
contribution for 2011.
Eligibility for Saver’s Credit
If you are single and make less than $28,250, or are
married and make less than $56,500 and contribute to an employer’s 401k plan,
you qualify for a saver’s credit.
I figure it for you when I do your taxes.
Hybrid Vehicle Credit
is no longer available after 2010.
So sorry if you bought one in 2011 and expected to
get a credit of some kind.
Making Work Pay Credit
is no longer allowed on 2011 returns.
This was $800 for married couples and $400 for
singles in 2010.
To compensate for the credit loss at the beginning
of 2011, your federal tax withholding was increased to have more withheld by the
end of the tax year.
For those working more than one job, this type of
change can hurt you, because you may not have enough tax withheld between the
two jobs to compensate for the loss of the credit.
State of Utah Tax ID Number
The State Tax Commission decided to change from a 6
digit tax ID number on your W-2s to a 14 digit number in 2010.
Employers (and tax preparers) were unaware of this
change.
W-2s with the wrong number or with the WTH left off of the
end were rejected and had to be manually corrected by the tax commission.
As many of you are painfully aware, your state tax
refunds were delayed as a result.
Large employers such as Hill Air Force Base did not
have the new number on the W-2s.
Even the IRS W-2s didn’t have the WTH on the end of
the state tax ID number.
Please check your 2011 W-2s to ensure the 14 digit
number is there in its entirety.
If it isn’t, please get the correct number from your
employer before our tax appointment.
I will be watching for this very carefully to ensure
your state refunds are not delayed.
I apologize for the inconvenience this caused many
of you, but it won’t happen again. There are other tax law changes, but
these are the ones that affect most taxpayers.
When I prepare your return, I will ensure all of the
current laws apply to the calculations. DAVE’S CHECKLIST:
1.
Remember
the new
office location: 2297 N Hill Field
Rd #102, LAYTON, UT 84041
2.
Fill
out the enclosed organizer
3.
Request an online appointment
through
www.sandbergtax.com
4.
Tell all of my family and friends
about the excellent service and support I receive from Sandberg Tax Service so I
can get $10 off each referral I give Dave! THANK YOU FOR YOUR CONTINUED BUSINESS
AND SUPPORT!
I APPRECIATE IT!
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