2011 - The Year In Review
Another Long Weekend. The due date to file your 2011 tax return is April 17, instead of April 15, because of the Emancipation Day holiday in the
District of Columbia—even if you do not live in the District of Columbia.
Bush-era tax cuts unresolved. Reduced individual income tax rates, marriage penalty relief, an enhanced child tax credit,
and much more are part of a package of tax breaks known as the "Bush-era tax cuts." All of these incentives were renewed in 2010 and are
scheduled to expire after 2012. President Obama wants to allow the Bush-era tax cuts to expire for higher income individuals, which the White
House broadly defines as single persons with incomes over $200,000 and families with incomes over $250,000. In the summer of 2011, the White
House and the GOP reportedly came close to an agreement but nothing materialized. The fate of the Bush-era tax cuts will likely be one of the
major issues in the 2012 presidential electionctions, regardless of the amount of your adjusted gross income (AGI).
Payroll tax cut extended two months. President Obama signed the Temporary Payroll Tax Cut Continuation Act of 2011 in December
2011. The new law extends the employee-side payroll tax cut through the end of February 2012. The two-month extension is intended to give Congress
additional time to negotiate a longer-term extension of the payroll tax cut to cover all of calendar year 2012.
Cell phones removed from listed property category. The Small Business Jobs Act of 2010 removed cell phones from the definition
of "listed property." That category generally requires additional recordkeeping by taxpayers. In September 2011, the IRS issued guidance on the
treatment of employer-provided cell phones as an excludible fringe benefit. When an employer provides an employee with a cell phone primarily for
noncompensatory business reasons, the business and personal use of the cell phone is generally nontaxable to the employee and the IRS will not
require recordkeeping of business use to receive this tax-free treatment.
IRS makes mid-year 2011 adjustment to business standard mileage rate. The IRS announced a mid-year adjustment to the business
standard mileage rate because of rising gasoline prices. The business standard mileage rate increased from 51 cents-per-mile to 55.5 cents-per-mile
for the second half of 2011. The medical/moving standard mileage rate increased from 19 cents-per-mile to 23.5 cents-per-mile for the second half of
2011. Congress did not make a mid-year adjustment to the charitable standard mileage rate, which remained at 14 cents-per-mile for the second half of
2011. For 2012, the business standard mileage rate is 55.5 cents-per-mile and the medical/moving standard mileage rate is 23 cents-per-mile. The
statutorily-determined charitable standard mileage rate remains at 14 cents-per-mile for 2012.
IRS launches Voluntary Classification Settlement Program. In September 2011, the IRS launched a new program to enable employers
to voluntarily reclassify their workers for federal employment tax purposes and take advantage of a reduced penalty framework. The Voluntary
Classification Settlement Program (VCSP) is open to employers currently treating their workers as independent contractors and who want to
prospectively treat the workers as employees. The employer must not be under audit and satisfy other requirements. The IRS has not announced
an end-date to the VCSP.
Many Tax Provisions Set to Expire at Year-End. While most of the expiring incentives affect businesses, many individuals' taxes
will be affected by the expirations. A list of expiring provisions can be found here.
Preparer e-file mandate. A new law requires us as paid preparers to e-file all 2011 personal returns.
|
