Tuesday, January 24, 2012

Changes to 2011 Form 1040

There is a new box at the end of the form's second page, adjacent to the blank reserved for a spouse's occupation, for certain taxpayers to input their identity theft protection PIN (IP PIN). In 2011, the IRS sent IP PIN numbers by letter to taxpayers who were victims of identity theft. If they do not enter the IP PIN, and they received the letter, the return will probably be rejected.

There has been a drastic reduction in tax credits available for qualified energy efficient home improvements. The federal tax credit now stands at a maximum lifetime credit of $500. In 2010 the maximum was $1,500. Any credits taken in earlier years are subtracted from the $500 limit.

Capital gains and losses must now be reported on Form 8949 and the totals are reported on Schedule D. This schedule provides additional information to the IRS regarding the transaction.

If you own foreign financial assets, you may need to disclose these assets to the IRS on Form 8938.

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