United States Tax Highlights and Changes
Major tax changes for the 2011 tax year from IRS Publication 17.
Highlights
Foreign Financial Assets
If you had foreign financial assets in 2011, you may have to file the new Form 8938 with your return. There are different rules and amounts for married or unmarried taxpayers, and for taxpayers living inside or outside the United States. The IRS has posted a special page for this form, with links to the instructions, recent developments, and other useful items.
Reporting Capital Gains and Losses
In most cases, capital gains and losses must now be reported on the new Form 8949, with totals carried over to Schedule D. See Chapter 16 of IRS Publication 17 (pdf).
Other Tax Changes for 2011
Due Date for 2011 Returns
The due date for Forms 1040, 1040A, and 1040EZ is April 17, 2012 (April 15 is a Sunday and April 16 is the Emancipation Day holiday in the District of Columbia).
Standard Mileage Rates
The 2011 standard mileage rates have increased to:
Business Use of Vehicle
• 51 cents/mile for miles driven before July 1, 2011,
• 55½ cents/mile for miles driven after June 30, 2011.
Use of Vehicle to Obtain Medical Care or Move
• 19 cents/mile for miles driven before July 1, 2011,
• 23½ cents/mile for miles driven after June 30, 2011.
Standard Deduction and Personal Exemption
The standard deduction for some taxpayers who don't itemize deductions is higher in 2011. See Chapter 20 of Publication 17 as the actual amount depends on filing status. The amount you can deduct for each exemption has increased to $3,700 in 2011.
Self-employed Health Insurance Deduction
You can no longer reduce net self-employment income on Schedule SE by your self-employed health insurance deduction (but can still claim the self-employed health insurance deduction on Form 1040, line 29).
Alternative Minimum Tax (AMT) Exemption Increased
The 2011 AMT exemption amounts have increased to:
Single or Head of Household
• $48,450
Married Filing Jointly or Qualifying Widow(er)
• $74,450
Married Filing Separately
• $37,225
Health Savings Accounts (HSAs) and Archer MSAs
For distributions after 2010, the additional tax on distributions from HSAs and Archer MSAs not used for qualified medical expenses has increased to 20%. Also beginning in 2011, amounts paid for medicine or a drug are qualified medical expenses only if the medicine or drug is a prescribed drug or insulin. See the instructions for Form 8889 or Form 8853 for more details.
Roth IRAs
If you converted or rolled over an amount to a Roth IRA in 2010 and did not elect to report the taxable amount on your 2010 return, you generally must report half of it on your 2011 return and the rest on your 2012 return. See Publication 575 for more details.
Designated Roth Accounts
If you rolled over an amount from a 401(k) or 403(b) plan to a designated Roth account in 2010 and did not elect to report the taxable amount on your 2010 return, you generally must report half of it on your 2011 return and the rest on your 2012 return. See Publication 575 for more details.
Alternative Motor Vehicle Credit
You cannot claim the alternative motor vehicle credit for a vehicle you bought in 2011, unless the vehicle is a new fuel cell motor vehicle. See Chapter 36 of Publication 17.
First-time Homebuyer Credit
To claim the first-time homebuyer credit for 2011, you (or your spouse if married) must have been a member of the uniformed services or Foreign Service or an employee of the intelligence community on qualified official extended duty outside the United States for at least 90 days during the period beginning after December 31, 2008, and ending before May 1, 2010.
Repayment of First-time Homebuyer Credit
If you have to repay the credit, you may be able to do so without attaching Form 5405. See Chapter 36 of Publication 17.
Nonbusiness Energy Property Credit
This credit is figured differently for 2011 than it was for 2010. See Chapter 36 of Publication 17 for more details.
Health Coverage Tax Credit
This credit has been extended, and the amount has changed. See Chapter 36 of Publication 17 for more details.
Schedule L
Schedule L is no longer in use. You do not need it to figure your 2011 standard deduction. Instead, see Chapter 20 of Publication 17 for information about your 2011 standard deduction.
Making Work Pay Credit
The making work pay credit has expired. You cannot claim it on your 2011 return. Schedule M is no longer in use.
Mailing Your Return
If you file a paper return, you may need to mail it to a different address this year because the IRS has changed the filing location for several areas. See Where To File near the end of Publication 17.