Tax code changes could affect your return

There are several changes in the tax code that may have an impact on your return. Whether you prepare your return or hire someone, you should know what changes have been made. Even if someone else prepares your tax return, you are responsible for its accuracy.

Certain changes, such as the creeping up of the standard deduction, will be apparent when you fill out your tax forms.

The maximum 2011 liability for your Social Security is $4,485.60. Make sure your employers have not withheld more than that, especially if you have worked for more than one; it is possible that more has been withheld than your maximum liability. Attach all copies of form W-2 to your return to ensure you are credited with any overpayment.

Other changes may be confusing. In the middle of the year, the IRS mileage allowance changed. For the first six months the business mileage rate is 51 cents a mile; for the last six months the rate is 55.5 cents. For medical expense and moving expense the deduction is 19 cents a mile for the first six months and 23.5 cents for the last six months.

If you converted from a traditional IRA to a Roth IRA in 2010 and you selected the special two-year deferral rule, you must report half of the 2010 conversion income as a taxable IRA distribution for 2011.

It is also important to make sure you take all the deductions you are entitled to. Here are three important ones that are commonly overlooked:

Reinvested dividends. If you own mutual funds and have the interest and dividends reinvested into the funds, the mutual fund informs you and the IRS annually the amount of earnings that are taxable for the prior year. If you eventually sell some or all of your shares, make sure that you do not report gains on which you have already paid taxes. Your mutual fund should be able to provide you with the information you need.

Real estate points. If you refinanced your mortgage in 2011, you may prorate any points you paid over the length of the new mortgage. For example, assume you paid your financial institution $3,000 in points for a 15-year refinanced mortgage at the beginning of 2011. You are allowed to deduct $200 a year for 15 years.

Health insurance for business owners. If you own your own business, or have self-employment income, and file Schedule C, and you are eligible for Medicare, you can deduct premiums on your return for you and your spouse. You do not have to itemize in order to take this deduction. You are allowed this deduction only if you do not have a subsidized health plan from your employer or your spouse's employer. If you previously filed a return without deducting Medicare premiums, you can file an amended return to refigure the deduction.