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AMERICAN OPPORTUNITY TUITION CREDIT – For
2011, the credit provides undergraduates a dollar for dollar reduction of taxes
up to $2,500 for qualifying educational expenses. The credit includes expenditures for required
course materials such as books, supplies, and equipment needed for a course
whether or not the materials are purchased from the school. In addition the
credit is used for all four years of college and is refundable up to $1,000 and
taxpayers can receive up to 40% of the credit even though you owe no
taxes. The full credit is available for
taxpayers with modified adjusted gross income of $80,000 or less ($160,000 or
less for married couples filing jointly.)
CAPITAL GAINS – Through 2012, capital gains and
qualified dividends can be tax-free on the federal return. The capital gain
rate is zero percent (0%) for taxpayers in the 10%-15% tax bracket. The capital gain rate remains at 15% for taxpayers
in the 25% and above tax brackets
CHILD TAX CREDIT – A
taxpayer may be allowed a credit of $1,000 for each qualifying child under the
age of 17 as of the end of the tax year. The credit may be refundable in
certain circumstances
DOMESTIC EMPLOYEES – Once you pay $1,700 to one
employee, withholding and reporting requirements are necessary for wages
paid. Domestic employees are household
employees e.g. services performed in or about private homes by cooks, butlers,
housekeepers, governesses, maids, cleaning people, janitors, caretakers, handy
persons, gardeners, and drivers of cars for family use. If total cash wages earned by domestic
employees is at least $1,000 for the quarter, FUTA filings are due. If the worker is an employee of a company,
the payments are not subject to payroll taxes
EDUCATOR EXPENSES – For 2011, the $250 ($500 if
married filing jointly and both spouses are educators) for certain expenses of
elementary and secondary school teachers
GIFTING – The 2011 annual gift exclusion is $13,000
KIDDIE TAX – The Kiddie Tax applies to a child
who has not reached age 19, or age 24 and a full-time student, and their earned
income for the year does not exceed one-half of their support. Scholarships
received are excluded in determining the total support paid for the student for
the tax year
MORTGAGE INSURANCE PREMIUMS – 2011 is the last
year to deduct mortgage insurance premiums. Deduction is phased out based on
AGI.
NONBUSINESS ENERGY CREDITS – For 2011 the credit
is reduced to 10% up to a lifetime maximum of $500 with no AGI limitation. Energy Improvements include home insulation
systems that reduce heat loss/gain, skylights, central air conditioners,
natural gas, Oil or Propane furnaces, exterior windows, exterior doors, metal
and asphalt roofs, and biomass fuels stoves
RESIDENTIAL ENERGY EFFICIENT PROPERTY CREDIT – For
2011, there is a 30% credit for installation of qualified solar water heating
property, qualified solar electric property, geothermal heat pumps, and small
wind energy property. The credit applies
for property placed in service through December 31, 2016. The property must be installed in a building
and used as a residence. The credit can
be applied against AMT and any excess can be carried forward
RETIREMENT CONTRIBUTIONS –
– IRA: Contribution limits are $5,000 ($6,000
for taxpayers age 50 and older)
– SEP AND PROFIT SHARING: Contribution limit is $49,000.
– SIMPLE: Contribution limits are $11,500 ($14,000 for
taxpayers age 50 and older)
SALES TAX DEDUCTION – 2011 is the last year to
deduct sales tax in lieu of of state taxes paid on the Schedule A
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