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.
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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.