2012 April 17th IRS Deadline
The IRS opened the 2012 tax filing season today by announcing that taxpayers have until April 17 to file their tax returns if they normally would have been due April 15.
From the IRS website:
Taxpayers will have until Tuesday, April 17, to file their 2011 tax returns and pay any tax due because April 15 falls on a Sunday, and Emancipation Day, a holiday observed in the District of Columbia, falls this year on Monday, April 16. According to federal law, District of Columbia holidays impact tax deadlines in the same way that federal holidays do; therefore, all taxpayers will have two extra days to file this year. Taxpayers requesting an extension will have until Oct. 15 to file their 2012 tax returns.
Tax Guide for Homeowners
Are you a homeowner? If so, you may be eligible for certain credits and deductions.
IRS Publication 530 (2011 PDF version) describes new tax code changes for homeowners, what can and can’t be deducted, how a homeowner figures his or her adjusted basis in the home, and even contains a record-keeping worksheet to help homeowners track the costs of home improvement.
If you bought or sold a home last year, refinanced, paid real estate taxes, paid mortgage interest, or made significant home improvements, make sure you are prepared for the tax consequences of those actions.
For tax planning in calendar year 2012, please note that the itemized deduction for premiums you pay or accrue for qualified mortgage insurance in connection with home acquisition debt on your qualified home is no longer available after 2011.
Helpful Hints When Choosing a Tax Return Preparer
- Be cautious of tax preparers who claim they can obtain larger refunds than other preparers.
- Avoid preparers who base their fee on a percentage of the amount of the refund.
- Use a reputable tax professional who signs your tax return and provides you with a copy for your records.
- Consider whether the individual or firm will be around to answer questions about the preparation of your tax return months, or even years, after the return has been filed.
- Review your return before you sign it and ask questions on entries you don’t understand.
2011 Earned Income Credit (EIC) Income Thresholds and Maximum Credit Amounts
If you’ve claimed the earned income tax credit (EITC, or simply EIC) in the past and are looking to get a head-start on tax year 2011, take a minute to verify that you qualify for the credit again this year. From the IRS’ website:
Earned Income and adjusted gross income (AGI) must each be less than:
- $43,998 ($49,078 married filing jointly) with three or more qualifying children
- $40,964 ($46,044 married filing jointly) with two qualifying children
- $36,052 ($41,132 married filing jointly) with one qualifying child
- $13,660 ($18,740 married filing jointly) with no qualifying children
Tax Year 2011 maximum credit:
- $5,751 with three or more qualifying children
- $5,112 with two qualifying children
- $3,094 with one qualifying child
- $464 with no qualifying children
Investment income must be $3,150 or less for the year.
The Tax Relief and Job Creation Act signed into law December of 2010 provides a temporary increase in EITC and expands the credit for workers with three or more qualifying children. These changes are temporary and apply to 2009, 2010, 2011 and 2012 tax years.
The Education Jobs and Medicaid Assistance Act of 2010 signed into law August 10, 2010 repealed the Advance EITC. It was not available to workers after December 31, 2010.
For more information on whether a child qualifies you for the EITC, see Publication 596, Chapter 2, Rules If You Have a Qualifying Child (2011 draft version, subject to change).
NOTE: Since the earned income credit is a refundable credit (meaning it can produce a tax refund even if no tax is owed), the IRS carefully monitors its use. Consequences for taking the credit when ineligible are more severe than with other credits. Accordingly, you should thoroughly review the EIC rules to make sure you can take the credit.
Any tax preparer you hire should ask you several questions about the EIC to ensure your eligibility. If not, you are getting second-rate service, plain and simple.
IRS Publication 17 Updated for 2011
The IRS recently announced that it has posted a revised copy of its flagship income tax guide for individuals for use in preparing 2011 tax returns. While not an exhaustive guide to all tax matters, IRS Publication 17 covers the most common topics related to individual income taxation in plain language and with plenty of examples. It also gives taxpayers a brief rundown of what’s new for 2011.
At more than three hundred pages, it’s not exactly a quick read cover-to-cover, but its helpful table of contents and index make it a worthwhile resource for anyone with income tax questions or who is looking to save tax dollars. From the IRS website:
Publication 17 (PDF version), Your Federal Income Tax, features details on taking advantage of a wide range of tax-saving opportunities, such as the American opportunity credit for parents and college students, and the child tax credit and expanded earned income tax credit for low- and moderate-income workers. This useful 303-page guide also provides more than 5,000 interactive links to help taxpayers quickly get answers to their questions.
Publication 17 has been published annually by the IRS since the 1940s and has been available on the IRS web site since 1996. As in prior years, this publication is packed with basic tax-filing information and tips on what income to report and how to report it, figuring capital gains and losses, claiming dependents, choosing the standard deduction versus itemizing deductions and using IRAs to save for retirement.
If you have a quick question about an IRS individual income tax topic, we cannot recommend Publication 17 enough!
