Year End Tax Planning 2011

 1. Social Security Taxes

The one-year-only reduction in the Social Security tax expires at the end of 2011. In 2012, the Social Security tax will revert to its regular rate of 12.4%, with half (6.2%) paid by employers and the other half (6.2%) paid by employees. Self-employed persons pay the full 12.4% rate as part of the self-employment tax. For 2011, there was a temporary rate reduction to 4.2% for employees and to 10.4% for self-employed persons.

2. Educator Expense Deduction

The above-the-line deduction available for teacher's out-of-pocket classroom expenses expires at the end of 2011. This deduction will not be available for 2012 unless renewed by Congress.

3. Tuition and Fees Deduction

The above-the-line deduction for college tuition expires at the end of 2011. For 2012, both the Lifetime Learning Credit and the American Opportunity Credit will be available for college students.

4. Alternative Minimum Tax

Two separate provisions impacting the alternative minimum tax (AMT) will expire at the end of 2011. First, 2011 will be the last year when personal tax credits will be allowed to offset both the regular tax and the AMT. For 2012 and future years, tax credits will offset the regular income tax, but not any alternative minimum tax. Secondly, the temporarily patched exemptions for the alternative minimum tax will end in 2011. For 2012 and future years, the AMT exemption amounts will revert to a lower statutory amounts ranging from $22,500 to $45,000. This will result in more taxpayers being subject to the AMT, and will increase the adjustments for taxpayers already subject to the AMT.

5. Adoption Tax Credit

The refundable nature of the adoption tax credit expires at the end of 2011. For 2012, the maximum amount of the adoption credit decreases slightly from $13,360 (in 2011) to $12,650 (in 2012). For 2012, any unused non-refundable adoption credit can be carried forward up to five years to offset the regular income tax.

6. Mass Transit Fringe Benefit Reduced

For 2011, the tax-free exclusion for mass transit fringe benefits was set at $230 per month and was the same amount for tax-free parking benefits. For 2012, mass transit benefits no longer enjoy parity with the parking benefit. The 2012 amount for mass transit benefits eligible for tax-free treatment is $125 per month; while the parking benefit amount is set at $240 per month.

7. Deduction for Mortgage Insurance Premiums

The deduction for mortgage insurance premiums expires at the end of 2011. This deduction will not be available for 2012 unless renewed by Congress.

8. Sales Tax as an Itemized Deduction

The optional sales tax deduction expires at the end of 2011. This deduction is available in lieu of the deduction for state and local income taxes, and is particular valuable for taxpayers who live in states with no income taxes.

Continued...

South Florida FPA Chapters to Host Free Financial Planning Day

On Saturday, October 29, the FPA of Greater Fort Lauderdale, Miami-Dade, and Gold Coast invite you to South Florida Financial Planning Day, where financially-challenged South Floridians can receive free, no-strings attached guidance at McArthur High School in Hollywood.

By Philip Herzberg

In today’s uncertain economy, planning for you financial future is more important than ever.  If you have financial questions or concerns, or would like to learn how to better manage your finances, the FPA of Greater Fort Lauderdale, Miami-Dade, and Gold Coast invite you to South Florida Financial Planning Day, where you’ll have an opportunity to receive free, personalized, confidential answers from professional financial planners.  The event will be held on Saturday, October 29, at McArthur High School (6501 Hollywood Boulevard in Hollywood), from 10 AM – 2PM.

Focusing on assisting young adults and families needing financial guidance, South Florida Financial Planning Day is a unique opportunity to speak one-on-one with expert planners from regional FPA Chapters and CERTIFIED FINANCIAL PLANNER^TM professionals, who will provide classroom-style educational workshops and counseling on the key following topics: Budgeting, College Planning, Credit Management, Estate Planning, Insurance, Investing Basics, Mortgages, Retirement Planning, and Tax Planning. Bilingual Spanish and Haitian-Creole translators will be available to assist with workshops and confidential meetings with professionals.

South Florida Financial Planning Day is organized as part of Financial Planning Days – a first-of-its-kind national initiative to provide free financial education and programming to people across the country.  Financial Planning Days was created by four national non-profit organizations – Certified Financial Planner Board of Standards, Financial Planning Association, Foundation for Financial Planning, and the U.S. Conference of Mayors.

To learn more or register for the South Florida Financial Planning Day, visit http://www.financialplanningdays.org/SouthFlorida or call 877-861-7826. Walk-ins are welcome, but admission will be granted first to those who have registered online.

IRS: Tax Day Won't Be April 15 in 2011

If you're one of the hundreds of thousands of taxpayers who wait until the last minute to file your taxes, make a note: The IRS recently announced that the due date for 2010 individual federal income tax returns will be Monday, April 18, 2011.

Traditionally, Tax Day falls on April 15 unless that day happens to be on a Saturday, Sunday or federal holiday. In 2011, April 15 meets none of those criteria -- it falls on a Friday, and there's no federal holiday that day.

So what's the deal?

In 2011, Washington, D.C., will celebrate Emancipation Day on April 15, a day earlier than normal, since April 16 falls on a Saturday. Emancipation Day marks the anniversary of the day that President Lincoln signed the Compensated Emancipation Act. The Act, which was "for the release of certain persons held to service or labor in the District of Columbia," freed 3,100 slaves in the District, making DC residents the "first freed" by the federal government. In 2005, Emancipation Day was made an official public holiday in the District of Columbia.

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