ALEXANDRIA, VA, November 28 2011 - It’s nearly tax time again.
But don’t let it wreck your holidays – a little advance planning can make tax preparation easier and save you money.
The National Society of Accountants (NSA) offers this checklist of tax items, courtesy of CCH, a Wolters Kluwer business.
Let’s start with what’s going away after 2011, barring any last-minute extensions by the U.S. Congress:
- Payroll tax cut for employees and self-employed individuals
- Tax-free IRA distributions to charity
- Increased (to 100%) exclusion for sales of qualified small business stock
- Above-the-line deduction for higher education tuition costs
- Above-the-line deduction for certain out-of-pocket classroom expenses
- Deduction for state and local general sales taxes in lieu of state and local income taxes
- Mortgage premium insurance deduction
- First-time homebuyer credit for purchase of a principal residence in the District of Columbia
- Plug-in conversion credit for vehicles converted from standard to plug-in electric drive motor vehicles
- Residential energy property credit for qualified energy efficient improvements and expenditures
- Increased AMT exemption amounts for individuals
- Nonrefundable tax credit offset of your entire regular and AMT tax liability
Now is the time to make sure you take advantage of these provisions before the clock strikes midnight on New Year’s Eve.
On the plus side, several important tax provisions have been extended through 2012, so year-to-year decisions involving these items are less of a concern. They include:
- Reduced marginal tax rates of 10, 15, 25, 28, 33, and 35 percent
- Lower rates of zero- and 15-percent for capital gains, dividends and certain property held for more than five years
- Marriage penalty relief for taxpayers filing joint returns
- Repeal of exemption and itemized deduction phaseouts
- Various education-related incentives including (1) exclusion from income and employment taxes for employer-provided education assistance; (2) exclusion from income for National Health Service Corps Scholarship and Armed Forces Scholarship programs; (3) student loan interest deduction; (4) Coverdell Education Savings Accounts contribution limit and related provisions; and (5) American Opportunity Tax Credit (AOTC).
- Amendments made to the child tax credit, including the increased credit amount of $1,000 per qualifying child
- Child and dependent care credit enhancements, including the increased maximum credit percentage of 35 percent, higher income limits, and increased maximum amount of qualifying expenses
- Increased maximum amount of the earned income tax credit and broader AGI phaseout ranges for taxpayers with three or more qualifying children
“As usual, the federal tax code is an ever-changing minefield of provisions that can trip up even the most diligent taxpayer,” says NSA Executive Vice President John Ams. “That’s why professional tax preparers and accountants stand ready to help ensure that taxpayers are handling their tax returns in the best way possible and receiving the maximum deductions and tax credits.”
He noted that a recent biennial NSA survey found that the average tax preparation fee for an itemized Form 1040 with Schedule A and a state tax return was $233 for the 2011 tax season – only a 1.7 percent increase over 2009.
“This is one of the best values out there for any type of professional service,” Ams explained, “especially when you consider the complexity of the tax code. If a professional finds even one additional deduction or tax credit, it will probably more than cover the fee.”
NSA and its affiliates represent 30,000 members who provide accounting, auditing, tax preparation, financial and estate planning, and management services to approximately 19 million individuals and business clients. Most
membersare sole practitioners or partners in small- to medium-size accounting firms. NSA protects the public by requiring its members to adhere to a strict code of ethics and maintain an annual continuing education regimen.