2011 Tax Planning for Individuals

As I complete tax returns on extension, I am reminded that it is time to think about 2011 taxes.  The 2nd estimated payment is due June 15th. 

Summer time spawns garage sales and leftover donations to Goodwill and other organizations. Start your record keeping now for those non cash donations. Put money in your pocket by good record keeping. Get a donation tracker from you tax preparer or go online and get the Salvation Army guide to a fair market guide for donated items. Make a list and for big items take pictures. Individuals who keep good records usually get a higher deduction.

The Tax Relief Act of 2010 extended many benefits including:
Above-the-line deductions for some classroom expenses
Above-the-line high education tuition deduction
Mortgage insurance premium deduction
Marriage penalty relief
Another patch for the Alternative Minimum Tax (AMT)
Repealed the phaseouts for itemized deductions and personal exemptions.

Some items are gone in 2011, such as the extra deduction for vehicle sales tax and the deduction for property taxes even if you didn't itemize.

1099 reporting is expanded and some has been repealed:
Ebay users may be surprised when they get a 1099 next year for payments received through Pay Pal for items they sold.  The Housing Tax Assistance Act of 2008 requires the reporting of various payment card transaction starting in 2011! 

Help is on the way for those who sell stocks and mutual funds.  1099-B reporting will expand and  have to include the cost or other basis for shares sold or exchanged during the yearl.  This starts in 2011 for most stock acquisitions and in 2012 for most mutual fund transactions.

Small Landlords also got relief from expanded 1099 reporting that was passed in 2010.  Prior to the repeal this April, landlords were going to be required to issue 1099s for payments to another person for services that aggregated more than $600 in any tax year.  The current instructions for the 2011 1099-Misc do say that if you receive real estate rental income you must report and file the 1099-Misc by Jan. 31, 2012.  Watch for an amended version of the 1099-Misc.

Have a great summer.