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2011 Changes Provide Potential Tax Benefits

January 16, 2012

Be aware of tax law changes that will help you save on 2011 taxes

As you begin to gather your tax information to send to your accountant, you should be aware of some changes in the tax law that you may be able to take advantage of. This is not an all-inclusive list, so be sure to consult your tax advisor.

  1. Tax Benefits Extended: Recent legislation has extended some of the tax benefits that were available in prior years. The American Opportunity credit for parents and students has been extended and is available to claim on 2011 tax returns. If you have a child in college, be sure to discuss this and other education options with your tax advisor. The Enhanced Child Tax Credit of up to $1,000 per child has also been extended and is available to taxpayers with one or more qualifying children.
  2. Non-business Energy Property Credit: The Internal Revenue Service has also limited the Non-business Energy Property Credit. Taxpayers can claim a credit for up to $500 for certain home improvements placed in service during 2011, up to 10% of the cost of qualified energy-efficient property or improvements.
  3. First Time Homebuyer Credit: If a taxpayer claimed the first-time homebuyer credit on their 2008 income tax return, the second of 15 annual installments is due with their 2011 tax return. Note that repayment will also be required if a taxpayer purchased a home and claimed the credit on a prior return and subsequently sold it or stopped using it as their primary residence in 2011.
  4. ROTH IRA Conversions: For any individual who converted a qualified retirement plan into a ROTH IRA at any point during 2011, the entire amount of the conversion must be reported on the 2011 tax return. For those that converted to a ROTH IRA during 2010, the first installment of the conversion amount is reportable on the 2011 tax return.
  5. Standard Mileage Rate Increase in 2011: The standard mileage rate was increased from 50 cents a mile to 51 cents a mile for January through June of 2011 and 55.5 cents a mile for the rest of the year.
  6. Self-Employed Health Insurance Deduction: One of the benefits available for self-employed individuals is the ability to deduct the amount paid personally for health insurance. This deduction remains available for 2011 and premiums paid to cover an adult child under age 27 at the end of 2011 also qualify for the deduction. As in prior years, the insurance plan must be set up under the taxpayer’s business and the taxpayer cannot be eligible to participate in an employer-sponsored health plan.

These and other benefits have been made available for taxpayers by Congress and it is important that you know your available options. Do you have questions? Please feel free to contact me jtoher@kahnlitwin.com at any time. I would love to hear any of your success stories from years past below.

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