It will be our pleasure to assist you with the preparation of your 2011 INCOME TAX RETURNS.  We would like to take this opportunity to extend our appreciation for the confidence you have shown to our firm by your continued patronage and recommendations.  If you find it convenient and prefer to mail your tax information to us, please do so to the above Pleasantville address.  Mailing your information will be as efficient and more economical for you.  Please feel free to follow up with any questions.

Our tax season hours are 9:00 a.m. to 7:00 p.m. during the week, and will be held in either our Pleasantville or New York City office.  Saturday appointments will be held in Pleasantville from 9:00 a.m. to 4:00 p.m.  Appointments will begin Thursday February 2, 2012 through Tuesday April 10, 2012.  If you would like to schedule an appointment, kindly call our office at (914) 741-5555.  Please let us know at which location you would like your appointment.  Although you may not have received all the necessary documents, appointments may be scheduled immediately.  If you are missing any information at your appointment you may submit it later.

Payment Policy - Payment is appreciated at the time of the appointment.  This will allow us to keep any increase if necessary at a minimum.  We appreciate your cooperation.

Parking information - The meters on Wheeler Avenue are 50 cents for one hour only.  You may not feed the meter.  There is a two-hour parking lot with meters located off of Bedford Road.  To get to this lot, drive past our office and make a left at the light (Bedford Road), first left into the municipal parking lot before the church.  Do not park in the first few spots, as they are 15 minutes.  If you park toward the end you can walk down between the buildings and our office is directly across the street.  Please feel free to call our office for directions.

The following list of deductions, credits and income items will be of assistance to you when you are gathering the information necessary to prepare your 2011 Income Tax Returns.

DEDUCTIONS

1. Contributions of cash and property to qualified charities.  Cash and check contributions to a charity require a bank record, receipt or letter.  Contributions of $250 or more require a written receipt from the organization to substantiate the donation.  All non-cash contributions in excess of $500 require a receipt, with a complete description of the donation.  All non-cash contributions over $5,000 require an appraisal.  In addition, individuals who use their passenger autos in volunteer work for qualified charities can deduct 14 cents per mile.  Taxpayers may also deduct other cash expenses incurred on behalf of a charitable organization.  Donated automobiles, boats and airplanes valued at over $500 are limited to the charity’s selling price.  Be sure to obtain form 1098C from the charity, which must be attached to your return.

2. Interest paid on mortgages may be partially or fully deductible. Please bring closing statements on any new mortgages or equity loans.

3. Interest paid on student loans – up to $2,500 is deductible. Restrictions apply.

4. Higher Education Expense deduction for undergraduates or graduate studies – up to $4,000 - certain restrictions apply.

5. Taxes paid on local real estate, personal property, state and local income taxes. Please bring your canceled checks for all Federal and State estimated taxes paid.

6. Sales Tax - Taxpayers may elect to deduct state and local general sales taxes as itemized deductions, in lieu of state and local income taxes.  Restrictions apply.

7. Medical Expenses including doctors, dentists, hospitals and travel at 19 cents per mile, from 1/1/11-6/30/11 and 23.5 cents per mile from 7/1/11-12/31/11, plus parking fees, tolls, drugs and medical insurance premiums, if the total exceeds 7.5% of Adjusted Gross Income.  The premiums for Long Term Insurance contracts may also be deductible. Restrictions apply.

8. Casualty Losses (in excess of $100 per occurrence), such as auto accidents, theft, and storm damage, which exceed 10% of Adjusted Gross Income.

9. Alimony - Please bring your ex-spouse's social security number.

10. Moving expenses - Deductible-moving expenses are limited to the cost of transportation of household goods, personal effects and travel (including lodging but not meals) to the new residence.  The new principal place of work must be at least 50 miles farther from the taxpayer's old residence, which must be more than the old residence was from the taxpayer's old place of work.  If there was no old place of work, the new place of work must be at least 50 miles from the old residence.

11. Self-employed individuals can deduct 100% of the cost of their health insurance on their Schedule C.

12. Professional and Legal fees are deductible if incurred for the preservation of income.

13. Teacher deductions up to $250 for buying classroom supplies.

14. Miscellaneous Deductions

• Union dues, non-reimbursed employee business expenses (including auto expenses, work tools and uniforms), professional journals and income producing expenses.
• Non-reimbursed business miles are deductible at 51 cents per mile from 1/1/11-6/30/11 and 55.5 cents from 7/1/11-12/31/11.
• No deduction will be allowed for travel to conventions or seminars if not related solely to your trade or business.
• Business meals and entertainment are 50% deductible.
• Losses in traditional or Roth IRA’s if distributed, may be deductible – certain restrictions apply.
• The above miscellaneous deductions must exceed 2% of Adjusted Gross Income.

The following tax credits may apply for 2011:

15. NYS filers may claim a refundable tuition tax credit up to $400 or as an itemized deduction- certain restrictions apply.

16. New York State (529 plan) - New York State College Tuition Savings Program. NYS filers may be able to deduct $5,000 for single filers and $10,000 for joint filers for a college tuition savings program - certain restrictions apply.

17. New Jersey Best (529 plan) – Educational program. New Jersey filers are entitled to tax free earnings in a college tuition savings program - certain restrictions apply.

18. Connecticut Higher Education Trust (CHET) – Connecticut filers may be able to deduct $5,000 for single filers and $10,000 for joint filers for a college tuition savings program – certain restrictions apply.

19. CT, NJ, & NY Sales & Use Tax Due - If you purchased any items out of your home state and did not pay sales tax or paid sales tax less than the required amount in your county, you will be required to pay an additional tax on your Resident State Income Tax return.  Please provide us with the amounts of each purchase. (Internet and catalog purchases should be included.)

20. NYS Real Property tax credit. Restrictions apply.

21. Claim for Empire State child credit. Restrictions apply.

22. NYS Sales Tax is no longer deductible on the NYS Return.

RETIREMENT ACCOUNTS

1. Individual Retirement Accounts - The deadline for your 2011 IRA contribution is April 15, 2012, regardless of extensions.  If you (or your spouse) do not participate in an employer's Retirement plan, you may continue to take an IRA deduction of up to $5,000 ($6,000 if 50 years or older) or 100% of compensation, whichever is less.  If you (or your spouse) participate in an employer's retirement plan, the dollar limit on your IRA deduction may be reduced.  This depends upon your Adjusted Gross Income and whether that income falls within a phase-out level.  The law permits a contribution of up to $5,000 ($6,000 if 50 years or older) to each non-working spouse's IRA under certain conditions.  For 2011 the maximum IRA contribution is also $5,000 ($6,000 if 50 years or older).

2. Please feel free to discuss any of the following IRA'S:

• Educational IRA now called The Coverdell Education Savings Account Contributions that are limited to $2,000 per beneficiary, are not deductible and are phased out ratably for taxpayers with Adjusted Gross Income between $95,000 and $110,000 (between $190,000 and $220,000 for joint filers).  Earnings are tax free if used for public, private, religious elementary, secondary schools and college.
• Roth IRA - Taxpayers and spouses may each make annual non-deductible contributions of up to $5,000 ($6,000 if 50 years or older) of compensation.  Phase out begins at $169,000 for joint filers and $107,000 for individuals.
• Roth 401K Plan – Allows employees to contribute to a retirement savings account with after-tax dollars and withdrawing that money tax-free in retirement.  The Roth 401K carries no income restrictions allowing you to contribute with pre-tax dollars while also contributing with after tax dollars.  The contribution cap will be the same as with just one choice $16,500 for 2011 or $22,000 for people age 50 and above by years end. For 2012 the maximum contribution is $17,000 or $22,500 for people age 50 and above by year end.
• Additional IRA Withdrawals without Penalty (certain restrictions apply)
  • Lifetime IRA distributions up to $10,000 used to purchase a home, prior to age 59 ½ (first time homebuyers only).
  • To pay qualified higher Educational Expenses of taxpayer, spouse, child or grandchild.
  • Death or Disability.
  • Distributions not exceeding medical insurance premiums of unemployed individuals.
  • Other exceptions apply.
• Self-Employed Retirement Accounts - The deadline for your 2011 Keogh contribution is no later than the due date (including extensions) of your return, provided your plan was opened by December 31, 2011.
• Health Savings Accounts (HSA’S) – Can deduct up to $3,050 before AGI ($6,150 for family coverage). You must have a high deductible medical plan in the amounts of single $1,200 and family $2,400.  Contributions to HSA’S can be made up to April 15, 2012.  An additional contribution of $1,000. is allowed if over age 55.

CREDITS

1. Child Care Expenses of up to $3,000 ($6,000 for 2 or more dependants) - Related to qualifying dependents under the age of 13, which enables you and your spouse to be gainfully employed.  The IRS requires the name, address and Taxpayer Identification Number (or social security number) of the childcare provider.  Childcare expenses include nursery school.

2. Taxpayers may take a tax credit for qualified adoption expenses – certain restrictions apply.

3. American Opportunity Credit is 100% of the first $2,000 of qualified tuition, fees and related expenses plus 25% of the next $2,000 of such expenses paid per eligible student, maximum credit - $2,500 - certain restrictions apply.

   OR

4. Educational Lifetime Learning Credit - Equals 20% of qualified tuition expenses not exceeding $10,000 - certain restrictions apply.

5. In any tax year, a taxpayer is permitted to elect only one of the above educational credits.

6. Taxpayers may be able to claim a child credit of $1,000 for each qualifying child under age seventeen - certain income restrictions apply.

7. New Small Business Credit on administrative costs to set up a qualified retirement plan.

8. The Hybrid Vehicle - A tax credit may be available for taxpayers who purchased a new hybrid vehicle.

9. Energy Home Improvements Credit maximum $1,500 – restrictions apply.

10. Solar Energy Credit – 30% credit is allowed.

INCOME

1. Salaries (W-2's) and self-employment earnings (1099's).

2. Dividend and interest income (1099's). The top rate on qualified dividends is 15%.

3. Rental income and related expenses.

4. Alimony.

5. Capital Gains

• The maximum federal rate for capital gains is 15% for assets held longer than 12 months.

6. Gain On The Sale Of A Personal Residence

• A seller of any age who has owned and used the home as a principal residence (for at least 2 out of the 5 years before the sale) can exclude $250,000 of gain ($500,000 for joint filers).
• These exclusions can only be used every 2 years.

7. Unemployment compensation is taxable.

8. Social Security benefits may be taxable; subject to certain qualifications (tax-exempt interest income is included in making this calculation).  Be sure to bring all 1099's for tax-exempt interest.  Social Security benefits received in 2011 may be taxable depending on your income.  In 2011, those who collect Social Security at age 66 will no longer be subject to an earnings test and their Social Security benefits will not be reduced.  Those between ages 62 and 66 can earn $14,160.  Those who will be age 66 in 2011 can earn $37,680 until they reach that age.  There is no cap on earnings for people for age 66 or older.  Individuals who turn 66 in 2012 can earn $38,880 until they reach that age.  Individuals between ages 62 and 66 by the end of 2012 can earn up to $14,640 before they lose any benefits.  There is no earnings cap once an individual turns 66.

9. The net unearned income (interest, dividends, capital gains and royalties) of children who are under 19 years of age at the end of the tax year, 24 if a full time student (which exceeds $1,900) will be subject to tax at the parent's rate.

10. Interest on Series EE U.S. Savings Bonds, issued after 1989 and cashed during 2011, may be excluded from tax if you incurred expenses for higher education and are under certain income limitations.

EXEMPTIONS

1. The amount allowed for each 2011 personal exemption is $3,700.

2. You may no longer claim extra personal exemptions if you are legally blind and/or age 65 or older.  However, you will be eligible for an additional standard deduction for age and blindness.  There is no additional deduction for property taxes and the purchase of a vehicle for those who take the standard deduction.

3. Please be sure to tell us of any new dependents for 2011 and bring their social security numbers.

TAXES

1. The threshold for estimated tax payments for the year ended 2011 is $1,000.

2. Self-employment tax rate is 13.3% for the year 2011.  This rate consists of a 10.4% component for old age, survivors and disability insurance (OASDI) earnings base (subject to maximum earnings of $106,800), and the Medicare component subject to the 2.9% tax, which is unlimited.

3. Self-employed and partners in New York State may be required to pay the Metropolitan commuter tax. Certain restrictions apply.

OTHER PERTINENT INFORMATION

1. Please be sure to bring evidence of all your income items, such as W-2's, 1099's, K-1's, etc.

2. If you are a new client, please bring copies of your last two years' tax returns.

3. Please bring social security numbers and dates of birth for all children and all other dependents.  Failure to list the number may result in a $50 penalty.

4. Parents cannot claim an exemption for a student who is age 24 or older at the end of the tax year, and whose income was $3,700 or more.

5. The income tax rates for the year 2011 are 10% - 35%.

6. If you have purchased a new home, any other real estate or refinanced, please bring all the closing documents.

 

Finally, upon receipt of your completed returns, be sure to carefully review them. Please notify us of any errors or omissions.

We look forward to serving your needs.