Quick Tax Summary for 2011
Vehicles:
Rev.
Proc. 2010-51 announced 2011 mileage rates as:
Medical/Moving 19 cents
Business 51 cents
Charity 14 cents
The portion of the standard business mileage rate treated as depreciation is
22 cents per mile for 2011 (23 cents per mile in 2010)
For business use of car providers, the allowed auto cost may not exceed
$26,900 or $28,200 for trucks and vans.
Exemptions & Rates
The December, 2010 Tax Relief Act made a number of changes and announcements
for 2011 and 2012.
1. 2011 and 2012 tax rates will remain at 10%-35%.
2. Personal exemptions are allowed in full for 2010, 2011 and 2012. The amount
remains unchanged at $3,650.
3. Itemized deductions are allowed in full for 2010, 2011 and 2012.
4. Capital gains rates for 2011 and 2012 remain at 2010 rates, and dividends
will remain taxed at capital gains rates through 2012 as well.
2011 and 2012 Capital Gains Rates
If net capital gain is from: |
Then maximum capital gains rate is: |
| Capital gain & qualified dividends when the
regular tax rate is lower than 15% |
0%
|
| Capital gain & qualified dividends when the
regular tax rate is 15% or higher |
15% |
| Un-recaptured Section 1250 Gain |
25% |
| Gain on Qualified Small Business Stock Eligible
for the Section 1202 Exclusion (Applies to taxable portion only after
exclusion) |
28% |
| Collectibles |
28% |
5. The marriage penalty relief provisions in place for 2010 are extended
through the end of 2012.
6. Alternative minimum tax exemptions for 2011 will be as listed. Additionally
personal tax credits will continue to be allowed against AMT for 2011.
| AMT Exemption Amounts |
| |
2001-2002 |
2003-2005 |
2006 only |
2007 only |
2008 only |
2009 only |
2010 only |
2011 only |
| Married Filing Jointly |
45000 |
49000 |
58000 |
62550 |
66250 |
69950 |
72450 |
74450 |
| Single or Head of Household |
33750 |
35750 |
40250 |
42500 |
44350 |
46200 |
47450 |
48450 |
7. The $250 teacher supply deduction was extended for 2010 and 2011.
Schedule A Deductions from the December, 2010 Tax Act
1. The deduction for sales tax in lieu of state and local income tax was
extended for 2010 and 2011. The special real estate tax deduction for non-itemizers
was not extended.
2. The conservation deduction rate for 2010 and 2011 was held at 2009’s rate
of 50% of AGI.
3. The direct trustee-to-trustee transfer from an IRA to a charity as a
non-taxable, non-deductible amount which satisfies RMD requirements was
re-instated for 2010 and 2011, limited to $100,000 per taxpayer, per year for
individuals over age 70 and ½.
4. The deduction for mortgage insurance premiums as qualified mortgage
interest was extended through 12/31/2011.
Schedule B
A provision of the 2009 HIRE Act will go in to effect at the end of 2011 for
foreign assets worth over $50,000. This includes investors in foreign equity
funds including hedge funds and private equity funds. If the total balance of
all such funds is greater than $50,000 (financial assets only) the taxpayer
must file a special statement with their 1040 showing: The maximum value of
the assets during the year; the name, address and account number of the
foreign financial institution where the account is maintained; the name and
address and other necessary information needed to identify the class or issue
of which the security was issued, and; any other contract, interest,
instruments, names, and addresses of all foreign issuers and counterparties
involved in any financial instrument. Note this filing is separate
from the disclosures of foreign accounts over $10,000 required on Form TDF
90-22.
Depreciation
- The December, 2010 Tax Relief Act made a number of changes affecting
depreciation:
1. Assets placed in service after 9/8/2010 and through 12/31/2011 qualify
for 100% bonus depreciation. Assets placed in service prior to 9/9/2010
qualify for 50% bonus depreciation. The 50% bonus rate is also available in
2012.
Bonus depreciation may be claimed on qualified leasehold improvement acquired
after December 31, 2007 and placed in service before 9/8/2010 at 50%. From
9/9/2010 through 12/31/2011 it qualifies at 100%, and for 2012 it again
qualifies at 50%. Restaurants & retail property do not qualify for bonus
depreciation unless they also meet the qualified leasehold improvements
definition under Rev. Proc. 2011-26.
| Purchase Date |
1/1/2009-9/8/2010 |
9/9/2010-12/31/2011 |
1/1/2012-12/31/2012 |
| Rate |
50% |
100% |
50% |
| |
|
|
|
Bonus depreciation is mandatory, and an election must be attached to the
return for any asset class life categories for which no bonus is taken. Only
new assets qualify for bonus, except for trade-ins, in which case the entire
basis of the new asset qualifies.
Bonus is not limited by income. Bonus is available for nearly all new
purchases in the applicable time period in the 3, 5, 7, 10, 15 and 20 year
life categories including leasehold improvements. Only related party
purchases, retail, restaurant and foreign assets are excluded from bonus
depreciation. Note that this change also allows 100% bonus depreciation for
heavy SUV’s and pickups with a GVW over 6,000 pounds.
2. Section 179 will decrease to $125,000 for 2012 with a $500,000 phase out
limit. In 2013 Section 179 drops to $25,000 with a $200,000 phase out ceiling.
Computer software will continue to be eligible for Section 179 through the end
of 2012.
3. The special 15 year depreciation life for leasehold improvements, retail
and restaurant property was extended through 12/31/2011.
Credits
The December, 2010 Tax Relief Act made a number of changes affecting
individual tax credits:
1. The 2010 child tax credit amount of $1,000 will continue through 2012, as
will the refundable nature to the extent of 15% of earnings above $10,000.
2. The higher 2010 rates and phase-outs will continue through 2012.
3. The dependent care credit amounts of $3,000 for one child and $6,000 for
more than one child are extended through 2012. Additionally the higher 2010
credit rate of 35% will continue through 2012.
4. The increased 2010 and 2011 adoption credit amounts are extended through
the end of 2012.
5. The Residential energy efficient home credit has been extended
indefinitely. However, the maximum credit allowed per home after 12/31/2010
will be limited to $500 overall and individually at $200 for windows and
similar pre-2006 credit limits. If the credit has already been taken on a
personal residence under old rules in excess of $500 total, no additional
credits will be allowed for that residence. If the taxpayer moves to a new
residence, the credit is available for the new residence.
6. The 30% alternative vehicle refueling property credit has been extended
through 2011.
Education
The December, 2010 Tax Relief Act made a number of changes affecting
education:
1. Student loan interest deductions are allowed for the total repayment term
through the end of 2012, and using the higher AGI phase out amounts from 2010.
2. Scholarships from the National Health Services Corp, and the F. Edward
Herbert Armed Forces Health professions Program will be tax free in 2011 and
2012.
3. The tuition and fees deduction has been extended only through the end of
2011.
4. The American Opportunity Credit has been extended through 2012.
5. Coverdell Education Savings Account deposit limits of $2,000 annually per
person are extended through 2012.
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