Tax Law Changes for 2011 Federal Tax Returns

Hate to say it . . . but taxes are a necessary evil this time of year.  So,when this info arrived in our inbox this morning we felt it only appropriate that we should share it with all of you.  Sorry!  Also thought it was a great opportunity to share this cartoon that Fred Kraft found years ago.  Just seems to convey our deep appreciation for our tax system and reminds Peggy how much she doesn't miss her tax practice. 

Before you file your 2011 federal income tax return in 2012, you should be aware of a few important tax changes that took effect in 2011. Check http://www.irs.gov/ before you file for updates on any new legislation that may affect your tax return.

Due date of return. File your federal tax return by April 17, 2012. The due date is April 17, instead of April 15, because April 15 is a Sunday and April 16 is the Emancipation Day holiday in the District of Columbia.

New forms. In most cases, you must report your capital gains and losses on the new Form 8949, Sales and Other Dispositions of Capital Assets. Then, you report certain totals from that form on Schedule D (Form 1040). If you had foreign financial assets in 2011, you may have to file the new Form 8938, Statement of Foreign Financial Assets, with your return.

Standard mileage rates. The 2011 rates for mileage are different for January 1 through June 30 than for July 1 through December 31. For business use of your car, you can deduct 51 cents a mile for miles driven the first half of the year and 55 ½ cents for the second half. Medical and moving mileage are both 19 cents per mile for the early half of the year and 23 ½ cents in the latter half.

Standard deduction and exemptions increased.
The standard deduction increased for some taxpayers who do not itemize deductions on IRS Schedule A (Form 1040). The amount depends on your filing status.

The amount you can deduct for each exemption has increased $50 to $3,700 for 2011.

Self-employed health insurance deduction. This deduction is no longer allowed on Schedule SE (Form 1040), but you can still take it on Form 1040, line 29.

Alternative minimum tax (AMT) exemption amount increased. The AMT exemption amount has increased to $48,450 ($74,450 if married filing jointly or a qualifying widow(er); $37,225 if married filing separately).

Health savings accounts (HSAs) and Archer MSAs. The additional tax on distributions from HSAs and Archer MSAs not used for qualified medical expenses increased to 20 percent. Beginning in 2011, only prescribed drugs or insulin are qualified medical expenses.

Roth IRAs. If you converted or rolled over an amount from a traditional IRA to a Roth IRA or designated Roth in 2010 and did not elect to report the taxable amount on your 2010 return, you generally must report half of it on your 2011 return and the rest on your 2012 return.

Alternative motor vehicle credit. You can claim the alternative motor vehicle credit for a 2011 purchase only if the vehicle is a new fuel cell motor vehicle.

First-time homebuyer credit. The credit expired for most taxpayers for 2011. Some military personnel and members of the intelligence community can still claim the credit in 2011 for qualified purchases.

Health coverage tax credit. Recent legislation changed the amount of this credit, which pays qualified health insurance premiums for eligible individuals and their families. Participants who received the 65 percent tax credit in any month from March to December 2011 may claim an additional 7.5 percent retroactive credit when they file their 2011 tax return.

Mailing a return. The IRS changed the filing location for several areas. If you're mailing a paper return, see the Form 1040 instructions for the correct address.
Detailed information on these changes can be found on the IRS website – http://www.irs.gov/.

Links:

Fact Sheet 2012-01 2011 Changes Offer Tax Benefits to Almost Everyone

Form 1040 instructions (PDF 941K)

1040 Central

Form 8949, Sales and Other Dispositions of Capital Assets

One Skein Projects

To make things a bit more fun as we go through winter, thought we would post some of Peggy's favorite fiber projects.  Hopefully, they will be posted once a week . . . or so (sorry, the weeks fly by quickly at times).  They might be a one skein knitting or crochet pattern or a small felting project or maybe even a pattern she has found online that she really likes but hasn't tried yet.  We can all try it out together and compare our likes and dislikes. 

The first one will be a request from Hailey Parker from Snowy River Alpacas. She wants to try the slouchy hat previously shown on our blog and Facebook. It is a free pattern found online by Marilyn Losee. The one in the pattern had flowers on the side . . . which not being a very girly girl, Peggy didn't add to her design.  Just follow this link to the pattern. 

It is a hat where you could easily change up the design by just substituting some other pattern other than the moss stitch.  You just need to select some combination of stitches that will fit within the numeric pattern of 84 stitches (one time around).

One note to the pattern.  It can be done on straight needles such that you sew a seam to finish the hat or it can be done on ciruclar needles.  If you follow the pattern it instructs you to purl the even numbered rows when you get to the crown of the hat. If you knit on circular needles you will want to knit those rows since you won't be turning your project the same as with straight needles. 

If you have any questions, just email Peggy.  If you want to purchase some yarn for this project, Peggy used Grey Super Fine Luxury Alpaca (of course) which is available on our site.  Keep me posted on how you like the pattern.

Fiber Artists Invited to Tucker Creek Store

A customer came into our store the other day and was sharing with her daughter that she was going to learn to knit this year so she could start now on her Christmas list and make all of her 2012 gifts. How awesome is that? That got us thinking about creating a fiber arts group which meets at our store to visit, share ideas and help promote the value of these various art forms. Starting this month we are inviting all fiber crafters (young, old, experienced or novice) to join us in our store whenever we are open (which currently is from 11:00 am to 4:00 pm Friday and Saturday).

If you are interested in a private knitting or crocheting lesson we will be offering those at $30.00 per hour (includes a $20.00 skein of yarn).  Just call us or stop by the store.  We are also in the planning stage for several seminars on various forms of felting. We have finally found some wonderful uses for our lesser quality fiber which turns into some lovely items when felted . . . so keep watching our posts as we will be sharing the results as we test these methods out.

The photos below show our latest hat design being worn by our favorite barista, Tammy from Coffee Girl here in Astoria.  Isn't it cute? If you would like one of your own or for a gift, they are available in our store or online for $40.00 plus shipping.

Hope you stop by the store soon--online or on Tucker Creek--to see what's new.

IRS Announces 2012 Standard Mileage Rates

IR-2011-116, Dec. 9, 2011
WASHINGTON — The Internal Revenue Service today issued the 2012 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Beginning on Jan. 1, 2012, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

55.5 cents per mile for business miles driven

23 cents per mile driven for medical or moving purposes

14 cents per mile driven in service of charitable organizations

The rate for business miles driven is unchanged from the mid-year adjustment that became effective on July 1, 2011. The medical and moving rate has been reduced by 0.5 cents per mile.

The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs as determined by the same study. Independent contractor Runzheimer International conducted the study.

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for more than four vehicles used simultaneously.

These and other requirements for a taxpayer to use a standard mileage rate to calculate the amount of a deductible business, moving, medical or charitable expense are in Rev. Proc. 2010-51.

Notice 2012-01 contains the standard mileage rates, the amount a taxpayer must use in calculating reductions to basis for depreciation taken under the business standard mileage rate, and the maximum standard automobile cost that a taxpayer may use in computing the allowance under a fixed and variable rate plan.

Related Item: IR-2011-104, In 2012, Many Tax Benefits Increase Due to Inflation Adjustments