Question: What are some of the new changes in the tax law for 2011 that people should be aware of when doing their taxes?

Answer: Tax preparers should note these changes:

>> Extension of preferential tax rates of 15 percent on long-term capital gains and qualified dividends through 2012

>> 100 percent federal bonus depreciation for trade and business asset purchases is set to expire at the end of 2011.

>> Tax-free IRA distributions directly to charity extended for certain individuals through 2012

>> New severe Hawaii limitations on itemized deductions

>> Favorable gift tax exemptions might be an incentive to transfer wealth to future generations.

Q: What are some of the most overlooked tax deductions/credits that people fail to take?

A: Among the most overlooked tax deductions and credits are charitable contributions, both cash and noncash; job-hunting expenses and moving costs; student loan interest paid by parents; military reservists’ travel expenses; mortgage refinancing points; child care credits; education credits; and credits for living “green,” such as energy credits.

Q: What are some of the things that people still can do in this final month of the year to lower their tax liability?

A: Here are some steps that can be taken:

>> Donate to charity, both cash and noncash.

>> Consult with your investment adviser whether there are capital gains to harvest to offset any capital losses, or vice versa.

>> Check that your withholdings and estimated tax payments are adequate to prevent underpayment of taxes.

>> Pay any expected 2011 Hawaii tax liability, including fourth-quarter estimated taxes, by Dec. 31 of this year if under the itemized deduction limitation of $50,000.

>> Contribute money to a traditional IRA or 401(k).

Q: If someone discovers a mistake in a prior year’s taxes, how long do they have to correct it?

A: Generally, the statute of limitations runs three years from the date the tax return is filed. For example, let’s assume there is an error on your 2008 tax return timely filed on April 15, 2009. You will have until April 15, 2012, to file an amended 2008 tax return.

Q:  What are the most common reasons why people are audited?

A: The most common are nonmatching income reporting, high mortgage interest deduction, home office deduction, high charitable deductions and math errors.

Q: What would be the typical amount that one could expect to pay for having a tax professional do their long-form returns if it is not complicated?

A: At a smaller CPA tax preparation firm, the estimated fee will likely range from $300 to $500. Typically, this fee includes e-filing federal and Hawaii tax returns comprised of W-2 income, itemized deductions, dividends, interest, a brokerage statement and a couple of K-1s. More complex tax returns, which might include a Schedule C business, rental income and multiple state returns, will cost significantly more.