WHAT'S NEW IN 2011? What we are going to cover: Training and Certification 2010 Tax Relief Act - New tax provisions in 2011 Items affecting tax preparation in 2011 and beyond
TRAINING & CERTIFICATION Counselors – six (6) steps Noncounselors – four (4) steps All must pass IRS Standards of Conduct test with 80% accuracy All must sign Volunteer Standards of Conduct All Counselors mustpass IRS test at 80%, Standards of Conduct, Basic, Intermediate & Advanced levels, using Pub 6744 or IRS Link & Learn test system
Standards of Conduct Training Training module in Pub 6744 and Link and Learn Includes 6 Standards of Conduct Includes 10 Quality Site Requirements All volunteers must answer 4 of 5 questions correctly
TRAINING PACKETS Link & Learn Training has been redeveloped More people use online for tax law training and learning TaxWise IRS - SPEC's ultimate goal is to have all partners transitioned to e-learning products and training by 2014
Training on TaxWise Train on TW10 for AZ through Jan 2012 Train on TW11 2011 returns TWO EROs can setup training users for both TW10 and TW11 TW11 users will carryover to TW11 Desktop EROs can setup TWO training users for both TW10 and TW11 Training TWO will be deactived 2/12 Procedure available on AZ TaxAide
TAX RATES CONTINUED* • The 2010 Tax Relief Act: • Extends all individual rates at 10, 15, 25, 28, 33 and 35 percent • Continues for two years – through December 31, 2012 * Affects 2011 and 2012 tax returns
PAYROLL TAX CUT The 2010 Tax Relief Act reduces the employee-share of Social Security taxes from 6.2% percent to 4.2% The change is for wages earned in calendar year 2011 up to the taxable wage base of $106,800 Self-employed individuals will pay 10.4% (down from 12.4%)on self-employment income up to the threshold
QUALIFIED CAPITAL GAINS AND DIVIDENDS* Qualified capital gains and dividends currently are taxed at a maximum rate of 15 percent (zero percent for taxpayers in the 10 and 15 percent income tax brackets) The 2010 Tax Relief Act continues for two years – until December 31, 2012 * Affects 2011 and 2012 tax returns
Schedule D and Form 8949 • Schedule D for 2011 – has new reporting lines using Form 8949 (New in 2011) • Form 8949 has three boxes that need to be completed for each taxpayer • Box A – Cost basis shown on 1099-B • Box B – Cost basis not shown on 1099-B • Box C – No 1099-B received
SCH D & FORM 8949, cont’d For each asset sold, the 1099 will have an A/B/C designator Assets can no longer be entered on Schedule D All assets information goes on Forms 8949 Page 1 is for short term; Page 2 is for long term
SCH D & FORM 8949, cont’dTab 2 In TaxWise, Capital Gain or Loss Transactions Worksheet (Cap Gain Wkt) will load 8949s and put assets on appropriate pages Long Term/Short Term Capital Gains/Losses Wkts will no longer be in Forms list A/B/C designators will be located on Cap Gain Wkt under 1099 column Column (b) is code for adjustments to gain/loss, wash sales, exclusion of gain on main home, etc Column (g) is the amount of the adjustment
SCH D & FORM 8949, cont’d • Column (b) is for gain/loss adjustment codes; see F1 help and Form 8949 instructions • Column (g) is for amount of adjustment
Standard Deduction/Exemptions • Standard deduction • MFJ - $11,600 (up $200) • Head of Household and $8,500 (up $100) • Single/MFS - $5,800 (up $100) • Personal/Dependency Exemption • $3,700 (up $50)
CHILD TAX CREDIT The 2010 Tax Relief Act extends the $1,000 child tax credit for two years, through December 31, 2012. The qualifying child must be under age 17 at the close of the year and satisfy relationship, residency, support, citizenship, and dependent tests.
EITC AND DEPENDENT CARE • Extends the enhanced EITC for two years (i.e., three or more qualifying children) • Extends the enhanced dependent care credit and eligible expenses for two years • From $2,400 to $3,000 and $4,800 to $6,000 for more than one qualifying individual • Maximum credit from 30% to 35 % of qualifying expenses
EITC • Earned Income and adjusted gross income (AGI) must each be less than: • $43,998 ($49,078 married filing jointly) with three or more qualifying children • $40,964 ($46,044 married filing jointly) with two qualifying children • $36,052 ($41,132 married filing jointly) with one qualifying child • $13,660 ($18,740 married filing jointly) with no qualifying children
EITC (continued) • Tax Year 2011 maximum credit: • $5,751 - three or more qualifying children • $5,112 - two qualifying children • $3,094 - one qualifying child • $464 - no qualifying children • Investment income must be $3,150 or less for the year. • Advance EITC no longer exists.
AMT PATCH* • The 2010 Tax Relief Act increases the exemption amounts for 2010 and 2011: • $47,450 for individual taxpayers • $72,450 for married taxpayers filing jointly and surviving spouses • $36,225 for married couples filing separately. * Affects 2011 and 2012 tax returns
Standard Mileage Rates • Beginning on Jan. 1, 2011, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be: • 51 cents/mile for business miles (55.5 cents effective 07/01/2011) • 19 cents/ mile driven for medical or moving purposes • 14 cents per mile driven in service of charitable organizations
LTC Premiums deduction • For 2011, the maximum amount of qualified long-term care premiums includible as medical expenses has increased on Schedule A (Form 1040) Itemized Deductions (per person) • $340 - Age 40 or under • $640 - Age 41 to 50 • $1,270 - Age 51 to 60 • $3,390 - Age 61 to 70 • $4,240 - Age 71 and over
EXTENDERS Qualified Charitable Distributions from certain individual retirement plans for charitable purposes (thru 2011) Deduction for educator expenses in figuring AGI (thru 2011) Tuition and fees deduction in figuring AGI (thru 2011) Itemized deduction for state and local general sales taxes (thru 2011)
EXTENDERS(continued) American Oppor Tax Credit (thru 2012) Child tax credit of $1,000 and the earned income threshold of $3,000 for the child tax credit (thru 2012) Private mortgage insurance deduction (through 2011) Non-business energy property credit (with some limitations) (thru 2011) EITC increased credit for three or more qualifying children (thru 2012)
Non-business Energy Property Credit This credit has been extended for 1 year with a reduced rate of 10%. Amounts provided by subsidized federal, state, or local energy financing do not qualify for the credit. The energy-efficiency standards for qualified natural gas, propane, or oil furnaces, or hot water boilers have been increased.
Non-business Energy Property Credit (continued) • For 2011, the credit is limited as follows. • Total combined credit limit of $500 for all tax years after 2005 (Form 5695, Part I). • Combined credit limit of $200 for windows for all the amount of your tax years after 2005. • Maximum credit for residential energy property costs: • $50 for any advanced main air circulating fan; • $150 for any qualified natural gas, propane, or oil furnace, or hot water boiler; • $300 for any item of energy-efficient building property.
IRS CHANGESFOR VITA-TCE • Lump-sum social security payments are included as Basic competency • Last year, only current year taxability in scope, but use of numbers from previous year returns in scope this year • No second copy of Form 8879 and income attachments, i.e. W2s’, 1099s’, etc retained at the site or by the ERO • SPEC no longer requires copy for storage; taxpayer still signs single copy prior to efile submission and retains the copy with their tax records
NEW PREPARER USE FORM • Dedicated to Preparer’s Use Fields • Prep Use Fields no longer on Main Info Sheet • Prep Use Fields increase from 15 to 25 • Standardized to 15-character alphanumeric • Enter up to 25 questions in column A
Intake/Interview & Quality Review Sheet Form 13614-C