January 10, 2012
Dear Client and Friend,
We are looking forward to working with you on your taxes soon. Please note the following key amounts and tax highlights for years 2011 and 2012:
The mileage rate for business increased mid-year to 55.5 cents.
The medical and moving mileage rate went to 23.5 cents mid-year.
Section 179 business deduction limits in place are $500,000 overall and $250,000 on qualified real property and $25,000 on SUV “Listed Property”.
Per Diem rate for transportation industry: meals start at $52 up to $65 per day using the “high/low” method. The standard lodging rate is $77 or $168/$108 using the “high/low” method.
Depreciation limit on light trucks and vans for the first year is $3,260. Adding bonus depreciation brings it up to $11,260.
The top tax rate for personal income tax filers is still at 35% with the AMT patch still in place. This was extended in the December 17, 2010 tax bill.
Also extended in this bill was the elimination of itemized deduction phase out for upper income tax payers. There will be no limit to itemized deductions through December 31, 2012.
Also the $1,000 Child Tax Credit for dependent children stays in place until December 31, 2012.
Marriage penalty relief was extended through December 31, 2012.
Student loan interest deduction phase out ranges still set at $120,000 for single to $150,000 for married joint payers. This is an “above-the-line” deduction.
Education Credits, such as the American Opportunity Credit, is a 40% refundable credit. The credit is $2,500 per eligible student and is extended through December 31, 2012.
Qualified dividend tax rates still in effect through December 31, 2012. This taxes qualified dividends from zero tax up to a maximum rate of 15%.
Capital Gains tax rate of 0 to 15% also extended through December 31, 2012.
Health Savings Account participants over 55, please see “catch up” contribution. Over the counter medication is no longer eligible without a prescription.
Retirement. Age 70½, if still working, you can contribute to an IRA and are not required to take a distribution.
Estate tax return exclusion set at $5 million. The maximum estate tax rate if 35%. (You can elect to use the old law.)
Gift tax exclusion is $5 million after December 31, 2010. See rules for “surviving spouse”.
Energy Efficient Appliance Credit is still in effect for tax year 2011. The maximum credit allowed id $500. This reduced by any credits claimed in 2006 – 2010.
Alternative fuel credit is still good through 2011. Maximum credit is $4,000.
Qualified tuition deduction is extended through December 31 2011. (There are income limitations.)
MIP Qualified mortgage insurance on home mortgage is good through 2011.
Qualified Leasehold Improvements are eligible for 15-year depreciation through December 31, 2011. (Must be unrelated parties.) They are also eligible on qualified retail or restaurant properties.
Long-term care insurance can be deducted as medical expense, or as an adjustment to income if self-employed.
Making Work Pay Credit is no longer available.
Please contact us for further discussion and be sure to bring your completed and signed tax questionnaire. This is very useful in getting you the best refund.
Thank you for your support in 2011 and we expect great things for you in 2012.
Happy New Year,,
Lynda Startzman
Razorback Financial & Income Tax Services
1611 South Greenwood
Fort Smith, AR 72901
Phone: (479) 478-9166
email: lynda.startzman@razorbackfinancial.com
