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Tax Deadline Delayed for Kentuckians in Federal Disaster Area

May 31 is the new 2012 tax deadline for those in the 21 Kentucky counties affected by the February 29 storms

After the severe storms, tornadoes, strong winds, and flooding that hit parts of Kentucky on February 29, 2012, President Obama declared 21 counties in the state Presidential Disaster Areas. The IRS has responded with relief in the form of a delayed tax day 2012.

Taxpayers who either live or own a business in the disaster area have a little over a month longer than normal to file their returns and take care of other tax-related business. The new deadline for these taxpayers to file both their federal return with the IRS and their state return with the Kentucky Department of Revenue is May 31, 2012.

Multiple tax deadlines falling between February 29, 2012 and May 31, 2012 have been pushed back to May 31, including the deadlines for filing an individual income tax return, making income tax payments, and making contributions to IRAs for the 2011 tax year. Both failure-to-file and failure-to-pay penalties that would normally go into effect during the postponement period will be waived until May 31.

The Kentucky Department of Revenue will match for state taxes all of the extensions made by the IRS for federal taxes. Continue reading “Tax Deadline Delayed for Kentuckians in Federal Disaster Area”

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How to Report Capital Gains with the New IRS Form 8949

In the biggest 2011 tax change, the IRS adds a new capital gains form to fill out along with Schedule D

Starting with 2011 taxes the IRS has all new rules for reporting capital gains, complete with a new Form 8949 [Sales and Other Dispositions of Capital Assets]. Basically you have to list on Form 8949 all the transactions that would previously have been reported on Schedule D [Capital Gains and Losses] or the now defunct Schedule D-1 [Continuation Sheet for Schedule D].

You may be surprised to learn the number of things that are considered capital assets – in fact almost all of your personal and investment property qualifies as a capital asset including your home, household furnishings, stocks, and bonds.

When you sell these assets, the difference between the price you bought them at and the price you sell them for is a capital gain (or loss).

All your income from capital gains you have to report – that’s where Form 8949 comes in. Continue reading “How to Report Capital Gains with the New IRS Form 8949”

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What Is Alternative Minimum Tax?

If you make more than $37,225 you could be hit by the Alternative Minimum Tax

The Alternative Minimum Tax (AMT) is a parallel system of income tax that makes sure wealthy taxpayers pay at least a minimum amount of tax, primarily by limiting the benefits available from deductions.

You could get hit by the AMT if an adjusted calculation of your taxable income lies beyond a certain threshold, called an exemption. If your income is above the exemption, you must pay either the normal income tax or the Alternative Minimum Tax, whichever is greater.

For 2011 taxes, the AMT exemption levels are $48,450 for single filers and heads of household, $74,450 for married couples filing jointly, and $37,225 for married taxpayers filing separately.

For the early birds already looking ahead to next year, the AMT exemption levels for 2012 taxes are $33,750, $45,000, and $22,500 respectively. Continue reading “What Is Alternative Minimum Tax?”