It is march and lot of people are now staying late and spending good amount of time to reconcile their last year taxes. Whether you use tax softwares like TaxAct like me or Turbo Taxes or uses your favorite CPA to file taxes, it is going to be daunting task if you aren’t really prepared for it. But don’t worry, there are lot of help available to make your life easier like free softwares which is capable of taking you step by step to complete your tax returns with no time.
General Things to remember
1. This year last day to file tax is Apr 18, 2011 (Monday) because in observation of Emancipation Day in the District of Columbia on April 15th this year. April 15th will still be the last day for state tax returns on all states.
2. Before you start working on your tax return for 2010 by yourself or with your CPA or tax preparer, collect all the required documents like W2, 1099′s like 1099-DIV, 1099-MISC and so forth. You should have recieved them from the corresponding institutions if you have income, dividend or interest earned. Also gather all your receipts for medical expenses, losses clamied due to theft or natural disasters, property tax and state tax paid and other deductions related documents which you can use to try filing itemized.
3. If you are married last year or had a Baby last year, don’t forget to count them as dependent and change your martial status to take proper dependent exemptions and standard deductions on filing jointly.
4. If you lost your loved one last year and you are still unmarried, you are still eligible to file married jointly this year. So don’t forget to file with Married Joint status to make use of exemptions and all the favorable tax phaseouts.
5. Don’t hesitate to try out Itemized Deduction option if you are using any tax softwares. You can compare the outcome and finally chose whether to opt for standard deduction or itemized depending on the outcome.
6. Try filing yourself if its simple return and take advantage of free tax softwares like TaxAct.com where you can efile free as well.
What are some important Tax rules changes for 2011?
1. Kiddie Tax – The amount of taxable investment income a child can have without it being subject to tax at the parent’s rate remains at $1,900 for 2010
2. The standard deduction for taxpayers who do not itemize deductions on Schedule A, Form 1040, has increased for those filing as Head of Household. The standard deduction amounts for all the other filing statuses remain the same for 2010:
Married Filing Jointly or Qualifying Widow(er) $11,400
Head of Household $8,400
Single or Married Filing Separately $5,700
3. The amount each taxpayer can deduct for each exemption remains at $3,650 for 2010.
4. Some taxpayers who purchased a qualified motor vehicle after February 16, 2009, and before January 1, 2010, did not have to pay their new motor vehicle taxes (state or local sales or excise taxes) until 2010. In these instances, they may be eligible to deduct the amount paid on their 2010 income tax return.
5. Each personal casualty or theft loss is limited to the excess of the loss over $100 (instead of $500). This is in addition to the 10% of AGI limit that generally applies to the net loss
6. For 2010, the minimum amount of earned income needed to claim the additional child tax credit is $3,000.
7. For tax year 2010, in addition to the three direct deposits, taxpayers can now use their refund to request up to three U.S. Series I Savings Bonds registrations and receive a paper check for the balance of the refund
8. As part of the Affordable Care Act of 2010, the adoption tax credit was extended, increased, and made fully refundable in the year claimed. For 2010, the adoption tax credit may be claimed for qualified expenses up to $13,170 for both nonspecial and special needs adoptions. The amount of the credit begins to phase out for taxpayers whose modified AGI is more than $182,520.
9. No more exclusion of up to $2,400 in unemployment compensation from income.
10. Itemized deduction for state and local general sales taxes expired.
Happy Tax Filing!!