Tax Tips & Calculators

Here´s what´s new for 2011 or continuing from 2010:

• U.S. Series I Savings Bonds – You can buy these with your refund without setting up a TreasuryDirect account in advance.
• Home-mortgage principal reductions – You don´t have to pay tax on Pay-for-Performance Success payments to reduce your mortgage principal.
• American Opportunity Credit – This modified Hope Credit for education was increased to $2,500 for most taxpayers. This credit is 40% refundable, so it could increase your refund.
• Alternative Minimum Tax (AMT) exemption amounts decreased to:
  
  
  • $48,850 for single or head of household
  • $74,450 for married filing jointly or qualifying widow(er)
  • $37,225 for married filing separately
  
  
  
• IRA deduction expanded – You might be able to claim a deduction if both of these apply:
  
  
  • You were covered by a retirement plan.
  • Your income was less than $66,000 – $110,000 for married filing jointly or qualifying widow(er)

If your spouse was covered by a retirement plan but you weren´t, you might be able to claim a deduction if your income was less than $179,000.

• First-time homebuyer credit – This credit is no longer available in 2011 except in certain limited circumstances for servicemembers overseas
  
  

If you move out of the house or sell it within 36 months after you bought the home, you must repay the credit.

• First-time homebuyer credit –This credit is no longer available in 2011 except in certain limited circumstances for servicemembers overseas.
• If you moved out of a house for which you claimed the first- time homebuyer credit, or sold it within 36 months after you bought the home, you must repay the credit.
• First-time homebuyer credit repayment for 2008 buyers – If you bought a home in 2008 and claimed the first-time homebuyer credit, the repayment provision began in 2010. You´ll owe the second first of the 15 installments this year. Each installment is $500.
• Energy property credits – You might be able to claim this credit for energy-saving items for your home.
• The child tax credit has increased for some people.
• Standard mileage rates are now:
  
  
  • 51 cents a mile before July 1, 2011 and 55.5 cents a mile after June 30, 2011 for business use of vehicle
  • 19 cents a mile before July 1, 2011 and 23.5 cents a mile after June 30, 2011 for medical care
  
  
  
• Personal casualty and theft loss limits – You can deduct losses of more than $100. To figure your loss, you must:
  
  
  1. Subtract $100 from each casualty.
  2. Total all casualty losses.
  3. Subtract 10% of your AGI from the total of all casualty losses.
  
  
  
• Earned Income Credit (EIC) maximum income changes are:
  
  
  • 3 or more children lived with you and you earned less than $43,998 – $49,078 if married filing jointly
  • 2 children lived with you and you earned less than $40,363 – $45,373 if married filing jointly
  • 1 child lived with you and you earned less than $36,052 – $41,132 if married filing jointly
  • No children lived with you and you earned less than $13,660 – $18,740 if married filing jointly
  • The maximum investment income you can earn and still get the EIC increased to $3,150.
  • Divorced or separated parents – Noncustodial parents can´t attach part of the divorce decree anymore. You must attach Form 8332 or a similar document that has all the same information as a Form 8332 that is signed by the custodial parent for the noncustodial parent to be allowed the dependency exemption.
  • Definition of a qualifying child changes:
    
    
    • The child must be younger than you, or permanently and totally disabled.
    • If the parents could claim the child but don´t, anyone trying to claim the child must have a higher AGI than either parent.
    • If you don´t claim an exemption for your child, you can´t claim the child tax credit for them.
    
    
    
• Child´s investment income tax – The amount of tax-free investment income for a child has increased to $1,900.
• Elective salary deferrals:
  
  
  • Maximum amount is $16,500 if no exceptions
  • Maximum amount is $11,500 if you have only SIMPLE plans
  • Maximum amount is $19,500 if you have only 403(b) plans and you qualify for the 15-year rule
  • Catch-up contributions for taxpayers over age 50 has increased to $5,500 – except for Section 401(k)(11) and SIMPLE plans