1. Toledo Accountants.net Tax Talk for 2011 Presenter: Charlie Finley

2. FILING BASICS

3. Sections of Form 1040  Total Income  Adjustments (Not available on 1040EZ)  Adjusted Gross Income  Itemized or Standard Deduction/Exemptions  Taxable Income  Tax  Non Refundable Credits  Payments, Refundable Credits  Refund or Balance Due

4. MAJOR SCHEDULES Sch- A (Itemized Deductions) Sch- B (Interest and Dividends) Sch- C (Self employed Income) Sch- D Cap Gains Income)(Sale of Stock and Personal Prop) Sch- E (Rental Prop and Royalties) Sch- F (Farm Income) Sch- EIC (Earned Income Credit) Sch- R (Credit for the Elderly) Sch- SE (Self employment Tax)

5. Standard Deduction and Exemption Standard Deduction (2011)  Single or Married Filing Separate– $5,800  Married Filing Joint or Qualifying Widow(er)–$11,600  Head of Household–$8,500 Personal Exemption: $3,700 (with NO Phase-out for Income)

6. Increased Standard Deduction Taxpayers who are age 65 or older and/or blind are entitled to the following increased standard deduction amounts: – $1,450 (per condition) for singles and heads of households – $1,150 (per condition) for all married taxpayers and qualifying widow(ers)

7. WHAT’S NEW FOR 2011

8. INDIVIDUALS Tax Rates Marriage Penalty Relief Limitations on Itemized Deductions and Personal Exemptions Small “Extenders” Mortgage Insurance Premiums Child Tax Credits Earned Income Tax Credit Education Credits Non Business Energy Property Credit AMT Patch Payroll Tax Holiday

9. 2011 TAX RATES 2011 Federal Tax RateSingleMFJ Standard Deduction$5,800$11,600 10%$8,500$17,000 15%$34,500$69,000 25%$83,600$139,350 28%$174,400$212,300 33%$379,150 35%$379,151+

10. MARRIAGE PENALTY RELIEF Provision that extends the Standard Deduction for couple filing MFJ to twice that of unmarried individual filing single. Provision extended for two years (2011, 2012) Otherwise, rules from 2000 would have applied, making MFJ filing status more costly and unfair.

11. ITEMIZED DEDUCTIONS/PERSONAL EXEMPTIONS PHASEOUTS Completely repealed for 2011 and 2012. The phase-out provisions would have been re- instated after 2010. Taxpayers can still get their full Itemized deduction and Personal Exemption amounts regardless of income.

12. SMALL “EXTENSIONS” Tuition and Fees Deduction Educator Expense Deduction State and Local Sales Tax Deduction Qualified Charitable Distributions from IRAs Extended for 2010 and 2011

13. MORTGAGE INSURANCE PREMIUMS Mortgage Insurance Premiums paid by Taxpayer on a qualified mortgage may be deducted as mortgage interest on Sch. A, subject to phase-out based on Taxpayer’s AGI. Extended for 2010 and 2011

14. CHILD TAX CREDIT Maximum CTC for each qualified child will remain at $1,000. Provision allowing refundability of the credit for earned income over $3,000 has also been extended. Phase out of CTC begins at $110,000 (MFJ) $75,000 (Single, HOH) $55,000 (MFS) Extended for 2011, 2012

15. EARNED INCOME TAX CREDIT Same criteria as 2010 were extended for 2011, 2012

16. EDUCATION CREDITS American Opportunity Credit was extended. Credit is partly refundable up to $2,500 per student, for qualified expenses for first 4 years of College. Coverdell Savings Account- Maintains $2,000 contribution limit. Student Loan Interest Deduction- Adjustment of up to $2,500 of qualified interest. Includes repeal of 60 month time limit. Extended for 2011 and 2012

17. NON BUSINESS ENERGY PROPERTY CREDIT Extended for one year the credit for Energy Saving Home Improvements. (Windows, Insulation, Furnaces) However… Credit is now limited to $500 (not $1,500) with window credit limited to $200 Extended for 2011

18. AMT PATCH $48,450 exemption for Single and HOH $74,450 exemption for MFJ Allows some non refundable personal tax credits for AMT (dependent care credit, non business energy property credit, lifetime learning credit) Unless extended, AMT limits go back to those from 2000. AMT is still broken. Extended for 2011

19. PAYROLL TAX HOLIDAY Reduction in the “Employee Only” portion of Social Security Tax. Reduced from 6.2% to 4.2% on first $106,800 of income. SE tax reduced from 12.4% to 10.4%. Maximum reduction is $2,136. Effective for 2011 only

20. WHAT WAS NOT EXTENDED… Beginning in 2010 Tax Year, there is no more: Increased Standard Deduction for Real Estate Tax First Time Home Buyer’s Credit New Vehicle Sales Tax Deduction Unemployment Compensation Exemption of $2,400 Required Minimum Distribution Waiver Beginning in 2011 Tax Year, there is no more: Making Work Pay Credit ($400 Single, $800 MFJ) Alternative Motor Vehicle Credit

21. QUESTIONS??? CHARLIE@TOLEDOACCOUNTANTS.NET