"Taxpayers should check for changes in the laws each year to make sure they are kept up-to-date with the most current information so they can file their taxes correctly," Stadler and Company Brazil office manager Tony Smiley said. "Plus, by keeping current, they can lessen the chance of missing out on a new deduction."
Smiley added it is important to note that the Bush tax cuts have been extended through 2012, but there are other changes this year to remember.
"This is the first year those who received the initial First-Time Homebuyer Credit, from purchasing a home between April 8, 2008 and Jan 1, 2009, have to start repaying that back," he said. "It was similar to a no-interest loan and must be repaid in 15 equal installments annually beginning with this tax year. Whatever an individual or couple's repayment amount is, it will be included as an additional tax on their return."
Also, the Earned Income Credit remains in effect for up to three children, while parents can utilize an insurance benefit for an additional couple of years.
"The Internal Revenue Service (IRS) extended the age for Health Coverage for Older Children from 24 to 27," he said. "Employees will also see an additional benefit this year as their portion of the Federal Insurance Contributions Act tax has been reduced from 6.2 to 4.2 percent."
Smiley said other tax credits that have been extended are the American Opportunity Tax Credit (formerly Hope Credit) and Educator Deduction.
One thing that has come back this year is the Estate Tax, which affects those dying after 2010.
"This is a federal tax, but it shouldn't affect many people," Smiley said. "If someone does have to pay the tax, the maximum rate in the next two years would be 35 percent."
With the passage of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, the applicable exclusion amount on estate taxes is $5 million, meaning if the size of the taxable estate plus "adjusted taxable gifts" made during a lifetime is that amount or less, there will be no federal estate tax to pay."
The act also provides a benefit for business owners making capital investments.
"For capital investments made between Sept. 8, 2010 and Dec. 31, 2011, a 100-percent depreciation bonus is provided," Smiley said. "This benefits business and landlords by giving them an additional tax break."
However, those hoping to get their return upfront upon filing may be out of luck.
"Many tax preparers and banks are no longer providing Refund Anticipation Loans (RAL) starting this year," Smiley told The Brazil Times. "It is basically Congress' way of protecting the consumer from high, up-front fees for the loan that some preparers have charged in recent years. Some preparers may still allow them, but taxpayers won't be able to get their full refund up front."
Smiley added taxpayers should also double-check which tax bracket they fall into on a yearly basis.
"Even when the economy is not in a state of flux, it's always a good idea to make sure which bracket you fall into," he said. "The figures may not change too much, but it may be enough to toss some into a new bracket."
This year, the deadline to file federal income taxes is Monday, April 18.
New tax brackets
The following table is a breakdown of the federal tax brackets for 2011:
|Bracket||Married Couples||Single (individuals)|
|35 percent||More than $379,150||More than $379,150|