Be Aware of 2011 Tax Law Changes
If you’re in the throws of pulling your 2011 income taxes together, I thought you might want a quick primer on a few of the changes in the law that might affect you. It is, after all, difficult to keep up:
* The deduction for business mileage had two levels last year. 41 cents per mile through June 30th and 55.5 cents from July 1st on. Higher gasoline prices are the reason. This is why keeping good records is so important
* If you converted some of your IRA to a Roth back in 2010, you were given two years to pay the incomes taxes on the conversion. The first half of the taxes is due with your 2011 return; the remainder with your 2012 filing
* There’s a new box on your W-2. It shows the amount of your employer-provided health care benefits. The amount is NOT taxable…it’s for information purposes only. The IRS will be using this data in the future to enforce aspects of the new health care law
* Keep an eye out for the 1099-K. It’s a new way for the IRS to track taxpayer income, especially if you earn income through PayPal, Amazon, eBay, etc. So, if you sell a lot of stuff online, this will apply to you. If you get a 1099-K, be sure to follow the new form’s reporting rules carefully
* The 1099-B: another new form. This should make reporting a bit easier if you acquired an asset after January 1, 2011 and then sold it. New cost basis rules require brokerage firms, etc. to note the post-1/1/11 asset’s basis so this should take the guesswork out of trying to figure out what you originally paid for an asset. Assets bought or inherited before 1/1/11 may still require digging to come up with your best guess on when the asset was acquired. But, eventually, this won’t be a problem
I hope these changes get you in the income tax mood. Always best to get things done in plenty of time before the filing deadline, which, by the way, is April 17th, due to the fact that the 15th is on a Sunday and the 16th is Emancipation Day in the District of Columbia. Do you know the history of Emancipation Day? Good luck on your taxes. Until next time, here’s to good planning!
