2011 Tax Return Filing Changes

Tax returns for 2011 will need to be filed in the next several months. Several changes occurred for this filing season of which taxpayers should be aware.
• This year’s filing due date is April 17th due to the 15th of the month being a Sunday and the 16th a holiday in the District of Columbia. Returns on the automatic extension are due October 15th.
• Cost basis reporting is required for brokers in 2011. For taxpayers, this means that the 1099 received from the brokers will include the cost basis for shares sold in 2011. The basis of shares bought in earlier years does not need to be reported on the form. In addition, the basis for shares bought but not sold will be reported in the year the shares are sold. This change may cause erroneous information to be reported to the IRS. This should be corrected before filing the tax return by requesting a corrected 1099, if possible.
• Taxpayers with foreign accounts will be required to file a new form, Form 8938, in addition to the Foreign Bank Account Report. This form’s filing threshold varies for taxpayers with total foreign financial assets of $50,000 (US based taxpayers) up to $400,000 (taxpayers living abroad). As with the Foreign Bank Account Report, penalties for not filing this form are severe.
• Schedule C filers are now required to answer additional questions on the tax return. The questions ask if the owner is required to file 1099 forms and if so, if they have been filed or will be filed. Form 1099 should be issued to vendors providing $600 or more in services. Penalties for not filing 1099 forms are also severe.
We’re happy to help with any tax questions you may have come up over the next few months.  If you are unsure of what documents to bring in with your taxes, we can help.  If you are a current client and plan to file after the April 17th due date, please let us know so we may file your extension.  If we may be of service to you in any way prior to preparing your 2011 tax return, contact our office.
/posted by Andrea Paezold-Ruehl, CPA