By Aaron Crowe
Every year seems to bring new headaches when filing taxes, with some deductions expiring and others being added. The changes help keep accountants employed.
Whether you're hiring a professional or doing your taxes yourself -- either on paper or through a computer program -- it's a good idea to know about the tax code changes so you can claim everything you're entitled to and get your tax refund fast.
The Bush tax cuts, for example, expire at the end of this year, making filing taxes this year relatively easy when compared with all of the changes coming next year. Here are some of the changes to be aware of and how they'll affect your tax filings for the 2011 tax year:
Retirement
The expiration of the Bush tax cuts could lead to higher tax rates next year, so converting an old IRA to a Roth IRA in 2012 could be a smart move if you expect to have a higher tax rate in retirement than you do now. Contributions in pretax dollars to a traditional IRA are deductible now, and withdrawals are taxable. With a Roth, the taxes are paid upfront and you won't owe income taxes on withdrawals when you retire.
Conversions from a traditional IRA to a Roth can lead to a high tax bill, with taxes on 2011 conversions due now. For people who used the special tax break in 2010 that allowed a conversion and the tax payments to be spread over two years, the Read the full article »