2012 Tax Law Changes You Might Not Know But Should

2012 Tax Law Changes

Keeping track of all the different tax law changes is almost as difficult of keeping track of how many times my wife wants to make a slight decor change to the interior of our home. It’s impossible!

These tax changes are the main reason I do not envy being a tax professional. My CPA earns every penny I pay him!

It never fails that the IRS is going to implement some new updates. Many of these changes are noticed and I’m sure many older men sit around in their coffee circles to debate them.

But there are several changes that go unnoticed. Even some tax preparers make overlook them. Here’s a quick rundown.

1. Don’t forget Form 8949

If you are reporting capital gains or losses for 2011, you must file this new form along with your return. Speaking of new paperwork, if you own foreign financial assets whose total value exceeds the applicable reporting threshold, you will need the new Form 8938.

2. Roth Rollovers Need to be Reported

Back in 2010, did you convert or roll over a traditional IRA to a Roth IRA or other Roth account? If you didn’t report the amount of the rollover on your 2010 federal return, you can report half the amount on your 2011 return 2011 and the remaining half in 2012.

3. A select few can still take the first-time home buyer credit.

By 2011, the credit had disappeared for just about everybody … but select military personnel and intelligence agents are still able to claim the credit for 2011.

4. Mileage Rates Were Updated

The IRS is giving taxpayers a better break given the recent hikes in gas prices. So, if you’re deducting mileage driven while operating an automobile for business, the rate for the first six months of 2011 is $0.51 per mile, and the rate for the last six months of 2011 is $0.555 per mile.

The standard deduction rate for medical or moving mileage was also raised: $0.19 a mile from January 1-June 30, $0.235 a mile from July 1-December 31. The mileage deduction rate for providing services for charitable organizations got no boost – for all of 2011, it is $0.14 per mile.

Fewer cars qualified for the alternative motor vehicle credit last year. Only new fuel cell motor vehicles qualified for the tax break in 2011.

Here’s a look at other tax deductions for business owners.

5, 6, & 7. Three healthcare changes to note.

If you qualify for the health coverage tax credit (HCTC), that credit might be larger for 2011 thanks to recent law changes. Did you receive the 65% tax credit in any of the last 10 months of 2011? If so, you get to claim an additional 7.5% retroactive credit on your 2011 federal return – the HCTC was bumped up to 72.5% from 65%.

The range of qualified medical expenses was reduced for HSAs & MSAs last year. In 2011, only prescription drugs and insulin counted as qualified medical expenses for these accounts. Another asterisk worth noting: if you took a distribution from an HSA or MSA in 2011 that wasn’t used for a qualified medical expense, the tax penalty for that increased to 20% last year.

Lastly, take the self-employed health insurance deduction on your Form 1040 for 2011.

If you are looking at Schedule SE and wondering where it went, it has migrated over to line 29 of Form 1040.1

8.  AMT Gets Another Cola Increase

Thanks to this adjustment, you are subject to the AMT for tax year 2011 only if you earned more than $48,450 as a single filer, $37,225 if married filing separately, or $74,450 if filing jointly.

9. Check the Address

Don’t send your return to an obsolete filing address. Some of the filing locations for federal tax returns have recently changed. Visit www.irs.gov to see where you should send your return this year – it is probably the same address as always, but check and see as it may be different.

10. Two Extra Days

Procrastinators, take heart: once again, the federal filing deadline this year falls on Tuesday, April 17. That’s because April 15 is a Sunday and April 16 is a holiday within the District of Columbia (Emancipation Day).

Citations.
1 – www.advisorone.com/2012/03/05/irs-top-12-tax-law-changes-for-2012 [3/5/12]
2 – www.irs.gov/newsroom/article/0,,id=240903,00.html [6/23/11]
3 – www.irs.gov/individuals/article/0,,id=109960,00.html [2/24/12]

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Comments | 1 Response

  1. Donny Gamble says

    One thing that I forgot to file this year that I have to file next year is the purchase of my silver coins. I think there will be more tax laws developed around these if the prices continue to go up.

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