Like it or not, the rules for filing your taxes change every year. Even experts have to relearn the ropes annually, with law changes, new forms, and other hurdles posing a constant challenge.
With just over a month to go before the filing deadline, here's a gallery of some of the more important changes hitting taxpayers this year. For a more complete list, look at the IRS' summary of tax law changes.
This Year's Tax Changes
2012 Tax Rule Changes: What You Need to Know
Each year, many figures that are important for tax purposes get adjusted for inflation. For the 2011 tax returns you're filing now, the adjustment was 1.5%, giving you a small extra break compared to last year.
If you have to report gains or losses from sales of stocks, mutual funds, or other investments, you'll notice the Schedule D form you have to complete has changed. In addition, the new Form 8949 allows you to plug in information that your broker is now required to provide to you for certain investment sales. Given that this is a new procedure, you'll want to double-check to make sure your broker has given you accurate numbers.
If you deduct mileage for business purposes, you'll have to deal with two separate rates: $0.51 per mile for the first half of 2011 and $0.555 per mile for the second half of the year. Similar changes happened for mileage for medical or moving purposes.
Most workers had the lower amount of payroll tax withholding reflected in their paychecks. But if you're self-employed, you'll need to adjust the amount of self-employment tax you pay to reflect the tax-rate drop. Remember, though, that the self-employed deduction for taxes paid doesn't reflect that reduction -- thus, your deduction will be more than half of the tax you pay.
If you took advantage of the provision that let you put off including a 2010 Roth conversion in your taxable income last year, it's time to pay the piper. You'll have to add half of the converted amount this year, with the rest going on your 2012 return.
Congress got its act together to provide an increased 2011 exemption to the alternative minimum tax. That's good news for filers this year, although the picture for 2012 is less clear, as lawmakers still haven't gotten around to making a similar provision for this year.
Tax law changes are a part of filing your taxes every year. As long as you're on the lookout for them, you should be able to avoid mistakes and get the refund amount you deserve.
So, you decided to become your own boss (at least part-time) and start driving for a ride-sharing company like Lyft. Use the Lyft tax preparation checklist below to organize your income and deductions to make filing your taxes a breeze. Remember, not all items listed will apply to you, but it will give you a good idea on what you need to report as income and what you can claim as a deduction.
Originally created to make sure the wealthy paid taxes even after using tax breaks and loopholes, the Alternative Minimum Tax (AMT) has never been updated and continues to impact middle class Americans more and more each year as a result of inflation. To compensate for inflation, the AMT now includes an exemption amount. This exemption is indexed for inflation so it changes every year.
Taxpayers who upgrade their homes to make use of renewable energy may be eligible for a tax credit to offset some of the costs. As of the 2018 tax year, the federal government offers the Nonbusiness Energy Property Credit. The credits are good through 2019 and then are reduced each year through the end of 2021. Claim the credits by filing Form 5695 with your tax return.
Every April, many taxpayers wait until the last minute to file their federal income tax returns. Despite this tendency, there are many reasons to file your taxes early. If you will receive a refund, you may want to submit your return as quickly as possible. Additionally, there are benefits to filing early for those taxpayers who have a balance due.