Income Tax Changes for 2010:
Standard Deduction Increased
The standard deduction for those not filing Schedule A has increased. The new standard deduction amount depends on your filing status.
First Time Homebuyer Credit
You may be able to claim this credit if you entered a written binding contract before May 1st, 2010 to buy the home before July 1, 2010 and completed the purchase before October 1, 2010. Certain members of the armed forces and other taxpayers have additional time to buy a home and take the credit.
Repayment on First Time Homebuyer Credit
If you claimed the First Time Homebuyer Credit for a home you bought in 2008, you generally must begin repaying it on your 2010 Tax Return. In addition, you generally must repay any credit you claimed for 2008 or 2009 if you sold your home in 2010 or the home stopped being you main home in 2010. If you claimed the First Time Homebuyer Credit after January 1, 2009, you are not required to pay it back.
Beginning in 2010, you can make a qualified rollover contribution to a Roth IRA regardless of the amount of your Modified Adjusted Gross Income. Also, half of any income that results from a rollover or conversion to a Roth IRA from another retirement plan in 2010 is included in income in 2011, and the other half in 2012 unless you elect to include all of it in 2010.
Self-Employed Health Insurance Deduction
If you were self-employed and paid health insurance premiums, you may be able to include with your self-employed health insurance deduction any premiums you paid to cover your child who was under age 27 at the end of 2010, even if the child was not your dependent.
Standard Mileage Rate for Deductible Mileage
For 2010, the standard mileage rates are:
• 50 cents a mile for business use
• 16.5 cents per mile for medical use
• 16.5 cents per mile for moving expenses
• And 14 cents a mile for charitable use
Personal Casualty and Theft Loss Limit
Each personal casualty or theft loss is limited to the excess of the loss over $100. This amount is different from the $500 limit for 2009. In addition, the 10% of adjusted gross income limit rule generally applies for the net loss. Congress is considering changing this regulation so check our website for the most current information.
These are the most important changes for 2010. Visit www.Taxes-PhD.com for more.