Changes for this Upcoming Tax Season

Posted by MoneyThinker in featured, Taxes | 0 comments

Yesterday I was babysitting, and when the father of the family I babysit for got home we started to talk about when they would need me to come over again. He started to look at the calendar, and said something about next Tuesday being November 1^st. That threw me off a bit, but he was right. Next Tuesday is November 1^st. That means that the New Year starts in about 2 months, and with a new year, comes filing for taxes.

I bet you’re as excited as I am for this time of year. Okay, I’m kidding, but it is important to start thinking about those taxes now. Today, we’re going to explore a few of the changes that the IRS has put into place for the 2011 tax season, starting January 1^st.

For individuals and couples:

-        This one’s for everyone: fees for late tax returns have increased to $30-$250, depending on the circumstances surrounding it.

-        Flexible Spending Arrangements (FSA’s) and Health Savings Accounts (HSA’s) can no longer help with over-the-counter drugs.

-        Energy-Saving Home Improvement tax credits were cut to 10 percent from the initial 30 they were in 2010.

-        If you died in 2011… let me rephrase that. Estates for people who died in 2011 are exempt from the estate tax if the amount of the estate is $5 million or less, $10 million for couples. It’s also only 35% of the estate, as opposed to the former rate of 55% (ouch).

-        Payroll taxes for most Americans were reduced by 2%, which could mean tax breaks of $2,000 or more.

-        All tax exemption rates were likely to be affected by the increase in inflation. This mostly affects the middle class, and will be even more apparent in 2012; make sure you check everything before filing.

-        Personal exemptions are now $3700, up from $3650.

For preparers:

-        If you’re a tax preparer and prepare more than 10 returns, you are now required to file electronically.

For businesses:

-        The addition of box 12-code DD to the W-2 is for employers to add any information regarding health care coverage for employees as part of the Affordable Care Act. It is not required this year, but starting next year it will be, so employers may as well do so now.

-        Business mileage allowance is 51 cents/mile, up from 50 cents.

-        Landlords who pay more than $600 to a company for services (plumbing, yard care, etc), must file a 1099-B for each company that they pay that amount to.

This certainly isn’t a comprehensive list of tax information; that would take a few days to do and I don’t want to bore you out of your minds (or myself; tax law is dull, no matter what you try to do to it). As always, if you have questions, seek out a professional to assist you, and until tomorrow, spend smart, save smart!