Welcome 2012, but 2011 is not over

New York State does not use itemized deductions but does allow a 20% credit from the total premium paid to be documented annually on Form IT-249, and attached to the regular state return, even if no taxes are due. The credit is cumulative and may be used to offset future tax liabilities that could occur so it is important to file the form even when there is no immediate tax liability.

The 2011 tax return does not include major changes in tax rates as the six current rates (10%, 15%, 25%, 28%, 33%, 35%) will continue without change for both 2011 and 2012. However, there are adjustments due to indexing, the elimination of some prior credits/deductions and some total new items as well.

Some of the changes include mid-year business and medical mileage adjustments, increases in standard deductions, lower social security contribution rate only for the employee, extension of capital gains qualified dividends, reinstatement of estate tax, revised home energy credit, IRA and Roth contribution phase out limits, the elimination of non-prescription drugs from HSA payments, and other technical changes too numerous to discuss here.

What’s gone and easily forgotten? Completely out is the two year limit for claiming equitable innocent spouse relief so that there is no longer a time limit for making such a claim, the credit for hybird vehicles (except those with fuel cells), the Make Work Pay Credit, and advanced payments for the earned income credit.

There are new forms for reporting the sales of capital assets and a revised Schedule D and Broker reporting on Form 1099-B. This will require more detailed reporting of all stock transactions so that IRS will be better able to match each tax return with broker statements prior to any other adjustments. Also new is another form to provide more information on foreign financial accounts as well as revisions to the schedule B information regarding foreign banks.

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