Tax Season Approaches
Posted on January 26, 2012 by Admin
Now that we’ve entered 2012, we all know what’s just around the corner: tax season. Because the usual due date for filing falls on a Sunday and the following day is a federal holiday, the due date for filing this year will be April 17. There are some changes from last year that are important to know before then, however.
Business mileage rates for 2011 were 51 cents per mile until June 30, 2011; after this date, rates increased to 55½ cents per mile. For 2012, mileage rates will be 55½ cents per mile for business, 23 cents per mile for moving and medical, and 14 cents per mile for charitable purposes. Because the temporary payroll tax cut was extended to February 29, employees will only have 4.2% of their earnings withheld for Social Security (as opposed to the usual 6.2%). The Social Security wage base for 2011 was $106,800, and will increase to $110,100 in 2012.
For the self-employed, the self-employment health insurance deduction will no longer offset the self-employment tax. However, the deduction can still be taken on Form 1040 as an adjustment to income. The first-time home buyer’s credit is now only available for members of the military or Foreign Service. For those repaying this credit, it may not be necessary to complete and attach Form 5405. Furthermore, the Making Work Pay Credit is gone for 2011.
In addition to all of these changes, there are some practical things that taxpayers should do to ensure that everything is ready for April 17. If you have moved, be sure to provide your employer(s) with your current address, so your W2s will get to you in a timely manner. For companies using online payroll services, this can be as easy as logging onto a website and changing your information. Also, be sure all of your tax information, such as number of dependents, is accurate.
If you are unable to change your address in time, at least be sure you have filed a change of address with the post office, in the event that any important documents are not sent to your former address. Many employers will not issue duplicate documentation, so if yours is lost in the mail or sent to the wrong address, you may have to wait a very long time before you are able to get the necessary items for your taxes.
Chris Rock once joked, “You don’t pay taxes; they take taxes.” However you choose to look at it, though, Benjamin Franklin had it right when he described taxes as one of life’s certainties. So don’t be caught unaware this year. File your taxes on time, and be sure you fully understand all of the changes that have been implemented for the 2011 tax year.
