More On Legal & Compliancefrom The Advisor's Professional Library
- Client Communication and Miscommunication RIA policies and procedures must specify what type of communications should be retained. The safest course of action is for RIAs to retain all communicationsto clients, from clients, and about client accounts. To comply with fiduciary obligations, communications must be thorough and not mislead.
- U.S. Securities and Exchange Commission Information This information sheet contains general information about certain provisions of the Investment Advisers Act of 1940 and selected rules under the Advisers Act. It also provides information about the resources available from the SEC to help advisors understand and comply with these laws and rules.
Although the current tax law situation can probably reasonably be compared to a liquid rather than a solid, since at least in the minds of legislators it is quite fluid, the IRS has compiled a list of changes governing how you’ll pay your taxes this year.
As part of AdvisorOne’s Special Report, 22 Days of Tax Planning Advice for 2012, throughout the month of March, here are 12 changes the IRS thinks you and your clients should know about.
1. Timing Is Everything
The first thing you should know is that taxes are due this year on April 17, not April 15. That’s thanks to April 15 falling on a Sunday and April 16 being the Emancipation Day holiday in Washington, D.C.
2. Gotta Have the Paperwork
New forms are de rigueur this year for capital gains and losses (new Form 8949, Sales and Other Dispositions of Capital Assets) and foreign financial assets (new Form 8938, Statement of Foreign Financial Assets).
3. It’s Not the Car’s Years, It’s the Mileage
You will need to divvy up your car’s mileage for last year based on when you accrued it. For Jan. 1 through June 30, the rate is 51 cents per mile; for the rest of the year it is 55½ cents per mile. For medical and moving mileage the rate is different, of course; Jan.1–June 30, the rate is 19 cents per mile. For the rest of the year it is 23½ cents per mile.
4. Writing It Off
Standard deductions and exemptions, says the IRS, are both up: the amount of the former depends on filing status for those who do not use Schedule A to itemize deductions, but the latter has been increased $50 to $3,700 for 2011.
5. A Matter of Health
If you have a health savings account or an Archer MSA, you will need to know that as of 2011, only prescribed drugs or insulin are qualified medical expenses. Also, the additional tax on distributions from HSAs and Archer MSAs that are not used for qualified medical expenses has increased to 20%.
6. Moving Things Around
The deduction for self-employed health insurance is no longer allowed on Schedule SE (Form 1040), but is now on line 29 of Form 1040 instead.
7. A Higher Alternative
Those subject to it this year will be happy to know that the AMT exemption amount has increased to $48,450 for singles, or $74,450 if married filing jointly or a qualifying widow(er); $37,225 if married filing separately.
8. Wrangling Roths
Did you convert or roll over money from a traditional IRA to a Roth IRA or designated Roth in 2010? If you did, and you did not elect to report the taxable amount on your 2010 return, you generally must report half of it on your 2011 return and the rest on your 2012 return.
9. A Car of a Different Color–er, Type
The alternative motor vehicle credit can only be claimed on a 2011 purchase if the vehicle is a new fuel cell motor vehicle.
10. Home Sweet First Home (For Some)
Most taxpayers who bought their first home last year are out of luck for the credit for first-time homebuyers; it expired before 2011. However, some military personnel and members of the intelligence community can still claim the credit in 2011 for qualified purchases.
11. Another Matter of Health
Recent legislation (there’s actually been some?) changed the amount of the health coverage tax credit, which pays qualified health insurance premiums for eligible individuals and their families. Participants who received the 65% tax credit in any month from March to December 2011 may claim an additional 7.5% retroactive credit when they file their 2011 tax return.
12. Don’t Forget to Ask for Directions
Last but far from least, the IRS would like you to know that the filing location has changed for a number of areas. If you are still relying on snailmail to send in your return, check the instruction book to see where it should go, or go to www.irs.gov.
See AdvisorOne’s Special Report, 22 Days of Tax Planning Advice for 2012, throughout the month of March.
Concerned about estate planning in light of the possible termination of the Bush-era tax cuts? Join AdvisorOne sister publication Tax Facts Online on March 7 at 2:00 PM EST for a free case-study webinar on “Estate Planning with Exemption Uncertainty.”