| Personal Exemption Increase | Top |
- The personal exemption amount has been increased to $3,700
| | Standard Deduction | Top | - Single or Married Filing Separately $5,800
- Head of Household $8,500
- Married Filiing Joint or Qualified Widow(er) $11,600
- However, the standard deduction of a taxpayer than can be claimed as a dependent by someone else is the greater of $950, or the taxpayer’s earned income plus $300 (up to the regular standard deduction amount)
- The standard deduction is increased by the following amount if the taxpayer at the end of 2011 is Unmarried: 65 or older or blind, $1,450; Unmarried: 65 or older and blind, $2,900; Married or qualifying widow(er): 65 or older or blind, $1,150; Married or qualifying widow(er): 65 or older and blind, $2,300; Married or qualifying widow(er): Both spouses 65 or older or blind, $2,300; Married or qualifying widow(er): Both spouses 65 or older and blind, $4,600
- If married filing separately, these amounts apply only if the taxpayer can claim an exemption for his or her spouse.
- The standard deduction is zero if the taxpayer’s spouse itemizes on a separate return or if the taxpayer is a dual-status alien who does not elect to be taxed as a resident alien.
| | Standard Mileage Rate | Top |
- The rate for business use of a vehicle has been increased to 51 cents per mile from January 1 to June 30, 2011, and 55.5 cents per mile from July 1 to December 31, 2011
- The rate for use of a vehicle to get medical care or move has been increased to 19 cents per mile from January 1 to June 30, 2011, and 23.5 cents per mile from July 1 to December 31, 2011
- The rate of 14 cents per mile for charitable use is unchanged
- Beginning in 2011, a taxpayer may use the business standard mileage rate for vehicles used for hire, such as taxicabs
| | Alternative Minimum Tax (AMT) Exemption Amount | Top |
- The AMT exemption amounts for 2011 have been increased
- $48,450 for single taxpayers
- $74,450 for married taxpayers filing jointly and surviving spouses
- $37,225 for married taxpayers filing separately
| | Roth IRAs | Top |
- If a taxpayer rolled over or converted part or all of a retirement plan to a Roth IRA in 2010 (or made an in-plan rollover to a designated Roth account after September 27, 2010), half of the taxable amount must be reported as income in 2011 (and the remaining half in 2012).
- However, this rule does not apply if the taxpayer elected to include the entire taxable amount in income in 2010.
| | Tax-Free Distributions from Individual Retirement Plans for Charitable Purposes | Top |
- Tax-free distributions to a charity from an individual retirement account (IRA), that were made during January 2011 cannot be treated as made in 2011 if the taxpayer previously elected to treat them as made on December 31, 2010
| | Rate Reduction in the Employee Portion of Social Security Taxes and Self-Employment Tax | Top |
- For 2011 only, the tax imposed on the employee portion of social security taxes and the self-employment tax has been reduced by two percentage points
- For employees, the social security tax withheld on wages has been reduced to 4.2% (on wages up to $106,800)
- For self-employed individuals, the tax on net earnings from self-employment has been reduced to 13.3% (on earnings up to $106,800)
- The employer portion of social security taxes is unchanged at 6.2 percent
| | Education Savings Bond Interest Exclusion | Top |
- To exclude this interest, the taxpayer’s modified adjusted gross income must be less than $86,100 ($136,650 if married filing jointly or a qualifying widow(er))
| | Foreign Earned Income Exclusion | Top |
- The maximum exclusion has been increased to $92,900.
| | Lifetime Learning Credit Income Limit Increased | Top |
- To claim this credit, the taxpayer’s modified adjusted gross income must be less than $61,000 ($122,000 if married filing separately)
| | Retirement Savings Contribution Income Limit Increased | Top |
- . To claim this credit, the taxpayer’s modified adjusted gross income must be less than $28,250 ($56,500 if married filing jointly; $42,375 if head of household)
| | Nonbusiness Energy Property Credit | Top |
- The credit rate has been reduced to 10%. Energy efficiency standards for qualified natural gas, propane, or oil furnaces or hot water boilers have been increased
- Amounts provided by subsidized federal, state, or local energy financing do not qualify for the credit
- The credit limit for 2011 has changed
- The total combined credit limit is $500 for all tax years after 2005
- The combined credit limit for windows is $200 for all tax years after 2005
- The maximum credit for residential energy property costs is $50 for any advanced main air circulating fan; $150 for any qualified natural gas, propane, or oil furnace or hot water boiler; and $300 for any item of energy-efficient building property
| | Adoption Credit or Exclusion | Top |
- The maximum adoption credit or exclusion for employer-provided adoption benefits has been increased to $13,360
- . In order to claim the credit or exclusion, the taxpayer’s modified adjusted gross income must be less than $225,210
| | Health Savings Accounts and Archer MSAs | Top |
- The additional tax on distributions not used for qualified medical expenses has been increased to 20%
| | Qualified Medical Expenses | Top |
- For HSA, Archer MSA, FSA, and HRA purposes, a medicine or drug purchased after 2010 is a qualified medical expense only if the medicine or drug:
- Requires a prescription
- Is available without a prescription (an over-the-counter medicine or drug) and you get a prescription for it
- Is insulin
- Expenses for breast pumps and supplies that assist lactation can now be deducted as medical expenses or reimbursed under an HSA, Archer MSA, FSA, and HRA
| | Health Coverage Tax Credit | Top |
- The credit has been reduced to 65% for amounts paid after February 2011 for qualified health insurance coverage
| | Earned Income Credit Checklist | Top |
- Taxpayers who use a paid preparer must now attach Form 8867, Paid Preparer's Earned Income Credit Checklist, to their income tax returns
| | Income Limits for Earned Income Credit | Top |
- A taxpayer may be able to take the earned income credit if the taxpayer:
- Had three or more qualifying children and earned less than $43,998 ($49,078 if married filing jointly)
- Had two or more qualifying children and earned less $40,964 ($46,044 if married filing jointly)
- Had one qualifying child and earned less than $36,052 ($41,132 if married filing jointly)
- Had no qualifying children and earned less than $13,660 ($18,740 if married filing jointly)
- The maximum adjusted gross income to take the credit also must be less than the applicable dollar amount shown above
- The limit on investment income to qualify for the credit also has been increased to $3,150
| | Statement of Foreign Financial Assets | Top |
- Any individual who holds an interest in any specified foreign financial asset is required to attach to his or her income tax return certain required information on each specified foreign financial asset if the aggregate value of the individual’s specified foreign financial assets exceeds $50,000
- Form 8938, Statement of Specified Foreign Financial Assets, is used to meet this requirement
| | Expired Provisions. The following benefits are expired and will not be available in 2011 | Top |
- Making work pay credit
- Self-employed health insurance deduction for purposes of figuring self-employment tax
- Exclusion from income of benefits provided to volunteer firefighters and emergency medical responders
- Computer technology and equipment allowed as qualified higher education expenses for qualified tuition programs (section 529 plans)
- Exemption from alternative minimum tax treatment for certain tax-exempt bonds
- Advance earned income credit
- The alternative motor vehicle credit for advance lean burn technology vehicles, qualified hybrid vehicles weighing 8,500 pounds or less, and qualified alternative fuel vehicles
| | BUSINESS TAX LAW CHANGES | Top |
| New Hire Retention Credit | Top |
- This credit is available for taxpayers who hired a qualified employee after February 3, 2010, and before January 1, 2011, but only if the employee worked for the taxpayer for at least 52 consecutive weeks
- The credit is the smaller of $1,000 or 6.2% of the employee's wages paid for the 52 consecutive week period. However, the worker's wages for the second 26 consecutive weeks must equal at least 80% of the worker's wages for the first 26 consecutive weeks
- The credit cannot be claimed unless the employee completes and signs Form W-11
- Hiring Incentives to Restore Employment (HIRE) Act Employee Affidavit, or a similar statement
- . The credit is claimed on the return for the tax year in which the first 52 consecutive week period ends
| | Expired Provision | Top |
- The special rule for 2010 increasing the maximum deduction for business start-up costs to $10,000 and beginning the phase-out range for the deduction at $60,000 has expired
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