Georgia Retirement Income Exclusion

Each taxpayer age 62 or older by the end of the year gets to exclude $35,000 of retirement income (only the first $4,000 in earned income) for 2011. Social security is already excluded 100% so is not part of the $35,000. In 2012, the amount goes to $65,000 and every year after the amount increases until all retirement income will be excluded. Georgia will become an even better place to retire.

Maximize Your Social Security

A good tool to increase your social security benefits if you are married and both at full retirement age is to take advantage of the file and suspend technique. The higher earning spouse applies for the benefit at full retirement age (age 66 for those born 1943 to 1954) and then asks that it be suspended and continue to earn delayed credits. The lower earning spouse can then file for a spousal benefit which gives them 50% of the other spouse's benefit. This does not reduce any future payment to the higher earning spouse. If the lower earning spouse's benefit is higher on their own account, they don't need to use this technique. The higher earning spouse can then claim their benefit at age 70 which will be 32% higher. When you apply for social security, remember the term "file and suspend" which may be a great strategy to maximize the family's social security.

Due Date of 2011 Individual Tax Returns

The due date for filing  individual income tax returns has been changed to Tuesday April 17th since there is a Washington DC holiday on the 16th.

Reporting on Stock Sales

For the first time, brokers will be required to report the customer's adjusted basis in stocks and bonds purchased after 2010 and whether or not the gain or loss is short-term or long-term for security sales. Before they only had to report the gross proceeds of the sales. This requirement doesn't cover mutual funds and stock acquired through reinvestment plans until after 2011.

Form 1099-K

Beginning for tax year 2011, banks that process credit cards and third party networks like paypal have to report payments to recipients on new form 1099-K, Merchant Card and Third Party Network Payments. The 2011 tax forms have line items on Schedules C, E, and F where the information from the 1099-K is to be reported. However, the IRS backed off of requiring compliance for 2011 due to possible problems with this new form.  I bet the reporting will fully be in place for 2012.