Helpful Information for 2011:

ADDITIONAL CHILD TAX CREDIT

A refundable additional child tax credit may be available to those who qualify and have not used up the available amount against their calculated taxes. The military taxpayer can add nontaxable combat pay to the earned income which may allow a larger credit.

Change your WITHHOLDING AMOUNT?

You can adjust the withholding amount and the allowances you are claiming by completing a new Form W-4, Employee’s Withholding Allowance Certificate, and giving it to your employer. Recent tax changes or personal changes such as marriage or divorce, birth of a child, and changes in employment or income may mean that too little or too much tax is being withheld. If you need to have more money taken out of your paycheck, reduce the number of withholding allowances, or figure the additional amount of money that you would like withheld each pay period

CHANGES FOR CHARITABLE CONTRIBUTIONS

Have you donated items to a local church or other charity? Contributions to charity require that you maintain accurate records.

No deduction is allowed for most clothing and household items unless the donated property is in good condition.  The exception: A single deduction of more than $500 may be claimed if the taxpayer includes a qualified appraisal

CHILD AND DEPENDENT CARE CREDIT (No change for 2011)

A credit for up to 35% of qualified child and dependent care expenses paid is available for taxpayers who pay childcare in order to go to work. Qualified expenses may be allowed for up to $3,000 for one eligible individual ($6,000 for two or more). Persons employed or looking for work who must pay someone to care for dependents under age 13 or for a qualified disabled person may be able to take this credit.

CHILD TAX CREDIT

The child tax credit remains $1,000 for a qualifying child under age 17. A qualifying child is a son, daughter, stepchild, eligible foster child who is a dependent, brother, sister, stepbrother, stepsister, or descendent of one of them (including grandchild, niece and nephew). This credit is nonrefundable, and can only reduce the taxpayer's income tax.

DEDUCTIBLE MILEAGE RATES

The maximum earned income credit for two qualifying children is $5,112 and for one child it is $3,094. For a taxpayer who does not have a qualifying child, the maximum earned income credit is $464.

EDUCATION EXPENSES

Taxpayers who don’t keep good records of their education expenses could be robbing themselves of money. Taxpayers who are going to college or have children in college could greatly benefit from keeping records of their educational expenses. They may possibly be able to deduct more from their tax returns and reduce their liability.

Form 1098T is an information document used by universities to report the amounts paid by students or amounts billed for tuition. It has often been used as a source document, but often it includes only the amounts billed for tuition. Therefore, taxpayers need to keep records of what they spent on tuition and how much they paid for related expenses to justify the education credits and expenses they claim on their returns.

College Education CREDITS

New: American Opportunity Tax Credit
There are two nonrefundable tax credits for payments made for qualified tuition and related expenses for post-secondary education.

The Hope credit has been replaced by the American Opportunity Credit and has increased to a maximum credit of $2,500.
The lifetime learning credit gives a credit of 20% of qualified educational expenses not exceeding $10,000, for a maximum credit of $2,000.

More:

The American Opportunity Tax Credit
 
The Lifetime Learning Credit

Tuition and Fees Deduction 

MEDICAL EXPENSES

Taxpayers who itemize can deduct non-reimbursed medical expenses that they paid during the year if these exceed 7.5% of their adjusted gross income.

MOVING EXPENSES

If you’ve moved during 2011 at least 50 miles in order to start work at a new work location, you may be able to deduct some moving expenses. See “Deductible Mileage Rates” (above).  Deductible moving expenses include the cost of moving furniture and household items as well as your lodging en route.

NON-BUSINESS ENERGY PROPERTY CREDIT

You can claim a credit for certain energy efficient improvements made to your principal residence in 2011. A lifetime limit of $500 applies.

QUALIFYING EXPENSES FOR EDUCATIONAL CREDITS

Which educational expenses qualify for the education credits? Tuition you paid for yourself, your spouse or a dependent to attend an eligible educational institution in 2011 should qualify. The amount of credit for the American Opportunity or Lifetime learning credits may be reduced depending on your adjusted gross income.

RETIREMENT SAVINGS CONTRIBUTIONS CREDIT

If you contributed to an IRA or an employer-sponsored retirement plan in 2011, you may be eligible for a credit.

SALES TAX DEDUCTION

You can take advantage of state sales tax deductions through 2011 if you itemize deductions. Taxpayers in Illinois can deduct their state income taxes or state sales taxes, whichever is more advantageous.  We will calculate which would be to your advantage.

STUDENT LOAN INTEREST

Repaying a student loan (or education loan) may qualify you to deduct up to $2,500 of your student loan interest as an adjustment to income.

TUITION AND FEES DEDUCTION
Qualifying higher education expenses such as tuition and fees you paid for yourself, a spouse, or a dependent may be deductible. Up to $4,000 of these expenses can be deductible as an adjustment to income depending on your adjusted gross income.