New for 2011
Audit Targets
In any given year, the IRS will typically target specific portions of tax returns or specific industries for audits, or both. The IRS announced that starting in November 2009 it will begin a special initiative to audit individual income tax returns with Schedule C’s that show a loss. In addition, the IRS will specifically be focusing on certain industries in these audits, including craft sales, photography, art and writing. Therefore, anyone with these types of businesses will need to be particularly diligent in their record keeping. For more specific bookkeeping suggestions or questions, contact our office.
Residential Energy Property Credit
You can, once again, be rewarded for making your home more energy efficient. The credit which expired in 2007 and then was reinstated for 2009 and 2010 has been reinstated once again, but this time with a maximum lifetime credit of $500.00, cumulatively. If you had not taken advantage of this credit in past years, it may be something you are able to take this year.
The credit is for certain high efficiency heating and air conditioning systems, water heaters and stoves that burn biomass all qualify, including the cost of installation.
Energy efficient windows and skylights, energy efficient doors, qualifying insulation and certain roofs qualify for the credit, however the cost of installation of these items does not qualify.
Residential Energy Efficient Property Credit
This credit equals 30% of what a homeowner spends on qualifying property such as solar electric systems, solar hot water heaters, geothermal heat pumps, wind turbines, and fuel cell property. Labor costs are included when you calculate this credit. And, this year, there is no cap on the amount of credit available, except on fuel cell property. Be sure you check the manufacturer’s tax credit certification statement before purchasing these improvements.
Standard deductions for 2011
Joint return or surviving spouse $11,600
Single $5,800
Head of household $8,500
Married filing separately $5,800
Standard mileage rates
51 cents a mile for business miles for January 1 through June 30, 2011
55.5 cents a mile for business miles for July 1 through December 31, 2011
19 cents a mile for medical miles January 1 through June 30, 2011
23.5 cents a mile for medical miles July 1 through December 31, 2011
19 cents a mile for deductible moving miles January 1 through June 30, 2011
23.5 cents a mile for deductible moving miles July 1 through December 31, 2011
14 cents a mile for charitable miles
Refundable Credits
Certain tax credits are Refundable credits, whereby they can be refunded to you if the credit exceeds your tax liability. Meaning, that if the tax credit brings you to zero tax, you can get the balance of the credit refunded to you. Nonrefundable credits can bring your tax liability to zero, but the balance of the credit is not refundable to you.
Education Credit Expanded
The 2009 Recovery Act made some temporary changes to the education credits:
1. Now called the American Opportunity Tax Credit
2. Increased AGI phase out range to $80,000-90,000 for Single or Head of Household and $160,000-180,000 for Married Joint
3. Maximum credit is $2500
4. Credit is now available for the first 4 years of post-secondary education
5. 40% of the credit is now refundable
6. Required course materials are now included along with tuition and fees
