2011 Tax Law Highlights

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 Alternative Minimum Tax:
Exemption amount increased in 2011

  • $48,450 if single or head of Household
  • $74,450 if married filing jointly or a Surviving spouse
  • $37,225 if married filing separately Non-refundable personal credits allowed

Non-Business Energy Property Credit
Credit reduced to 10 percent of qualifying expenses Credit limited to $500 for all years after 2005 combined credit limit of $200 for windows for all tax years after 2005 Maximum credit for residential energy property limited to specific dollar amounts 

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. In addition, for tax years beginning after December 31, 2010, the cost of an over-the-counter medicine or drug is not a qualified medical expense unless a prescription is obtained.

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.

  • Repayment of First-Time Homebuyer Credit
  • Do not need to attach Form 5405 to return just to report repayment of 1/15 of 2008 credit
  • Attach Form 5405 only for year in which reporting disposition or change in use of main home for which credit claimed. 

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. 

New Hire Retention Credit
Credit of up to $1,000 per employee available for qualified employees hired after Feb. 3, 2010, and before Jan. 1, 2011.  Employee must have worked 52 weeks, wages in second 26 weeks must have been at least 80% of wages in first 26 weeks.

Use Form 5884-B, New Hire Retention credit

Expired Provisions: 

  • Individuals making work pay credit
  • Exclusion from income of benefits provided to volunteer firefighters and emergency medical responders
  • Computer technology and equipment allowed as qualified higher education expenses for qualified tuition programs
  • Exemption from AMT treatment for certain tax-exempt bonds
  • Advance earned income credit 

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.

2011 Federal Income Tax Rates

The tax rate schedules shown below are provided so you can see the tax rate that applies to all levels of taxable income for tax year 2011.  For detailed tax rates, please refer to this IRS tax table booklet.

 

2011 Rates