Maximum Earned Income Credit Available

Earned Income and adjusted gross income (AGI) must each be less than:

Tax Year 2011 maximum credit:

• $5,751 with three or more qualifying children
• $5,112 with two qualifying children
• $3,094 with one qualifying child
• $464 with no qualifying children

• Worth up to $1,000 per eligible child and remains fully refundable for taxpayers with an earned income of over $3,000 for 2011 and 2012

• 45% of the first $12,570 of earned income for families with 3 or more qualifying children through 2012, up to $5,657.
• Phased out at $48,279 modified adjusted gross income if married filing jointly with 3 or more qualifying children.

Expanded Child and Dependent Care Expenses

• Worth between 20% and 35% of qualifying child care expenses for 2011 and 2012 for children under the age of 13 (if parents work or attend school)
• Maximum amount of qualifying expenses is $3,000 per qualifying dependent or $6,000 for 2 or more qualifying dependents
• Credit amount is reduced by 1% for each $2,000 of adjusted gross income of $15,000, but not below 20%

American Oportunity Tax Credit

• Maximum credit of $2,500 per student in 2011 and 2012 (covers 100% of the first $2,000 and 25% of the next $2,000) for tuition, fees and course materials (books) for the first 4 years of post-secondary education in a degree or certificate program
• 40% of the credit is refundable unless student is subject to kiddie tax rules
• Phased out at modified adjusted gross income $80,000 - $90,000 ($160,000 - $180,000 if married filing jointly

Tuition and Fees Deduction

• Eligible taxpayer, spouse or dependent enrolled in an eligible postsecondary institution may deduct up to $4,000 paid for tuition and fees in 2011
• Above-the-line deduction, meaning it can be can be claimed by those taking the standard deduction or itemizing

• Annual limit of $2,500 in undergraduate and graduate student loan interest can be deducted on 2011 and 2012 returns
• Phases out at $40,000 to $55,000 ($110,000 to $140,000 for joint returns)
• Student must have been at least half-time enrolled in a degree program
• Applies to interest paid on loans for tuition, required enrollment fees, books, supplies, equipment, room & board, transportation and other necessary expenses
• Above-the-line deduction

• Credit of 30% for expenditures related to larger residential energy improvements (solar hot water property, geothermal heat pumps and wind energy property) placed in service before Dec. 31, 2016
• Limit on credit amount removed for solar electric property
• Credit caps are also eliminated for qualified solar water heating, geothermal pumps, and small energy property; $500 cap for each half kilowatt of capacity of the qualified fuel cell property

• Mortgage insurance premiums paid on a qualified mortgage can be deducted as mortgage interest for 2011, subject to the taxpayer's adjusted gross income.

Friendly Reminder: 2008 First-Time Homebuyer Credit Repayment

• If you claimed the First-Time Homebuyer credit for a home purchased in 2008, you should have started repayment on your 2010 return (that was due April 18, 2011). Repayment will continue on your 2011 return and beyond until the credit is repaid.
• The 2008 credit is like a 15-year interest-free loan, with the amount repaid in 15 equal annual payments as additional tax on your federal return. You have the option of paying more than the annual amount due on Form 5405.

Change in Mileage Deductions

• The following apply to cars, vans, pickups and panel trucks: