April 15th is just around the corner, and I am deep in the process of preparing my 2011 taxes. Taxes are probably on your mind too, so this post will focus on recent federal tax changes, and the next will note changes to keep in mind for 2012 & 2013.
Here are 5 tax benefits of note which expired in 2011:
A series of temporary “patches” over the last several years has prevented a dramatic increase in the number of individuals subject to the AMT. The last patch expired at the end of 2011. Will another take its place? Hopefully, but if not, your chances of being subject to the AMT will increase in 2012.
State and Local Sales Tax
This is particularly valuable if you live in a state with no income tax (which would not include my state, New York). If you itemize your deductions, 2011 was the last tax year for which you could choose to deduct state and local general sales tax instead of state and local income tax.
The above-the-line deduction for qualified higher education expenses and the above-the-line deduction for up to $250 of out-of-pocket classroom expenses paid by education professionals both expired at the end of 2011. (Other education programs still apply).
Bonus Depreciation and IRC Section 179 Expense Limits
This one is relevant for small business owners. In 2011, you were allowed a first-year depreciation deduction of 100% of the cost of qualifying property acquired and placed in service during the year. This “bonus” depreciation drops to 50% for property acquired and placed in service during 2012, and disappears altogether in 2013. For 2011, the maximum amount that you could expense under IRC Section 179 was $500,000; in 2012, the maximum is $139,000; and in 2013, the maximum will be $25,000.
Qualified Charitable Distributions
This only applies for persons over age 70 1/2. Individuals could make qualified charitable distributions of up to $100,000 from an IRA directly to a qualified charity. These charitable distributions were excluded from income and counted toward any required minimum distributions for the year.
I do not provide tax advice or tax preparation. Please consult your tax advisor.
Next post: Tax Changes on the Way (for 2012 & 2013)
Examples are hypothetical and for illustrative purposes only. The information contained in this report does not purport to be a complete description of the developments referred to in this material and don’t constitute a recommendation. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Sara Stanich and not necessarily those of RJFS or Raymond James. Tax laws are subject to future revisons. Raymond James does not offer tax advice. Please consult your tax advisor for any tax issues.