More Making Work Pay Credit. The credit, aimed at the middle class as part of the American Recovery and Reinvestment Act, provides taxpayers with a refundable tax credit of up to $400 for working individuals and up to $800 for married couples filing joint returns, so long as they otherwise qualify. As before, most taxpayers will see an adjustment in their withholding amounts in their paychecks throughout the year, resulting in a small increase in take-home pay; taxpayers will actually claim the credit on their 2010 tax returns.
No deduction for sales tax on the purchase of a new vehicle. The tax provision that allowed taxpayers to take the itemized deduction or increase in standard deduction for sales tax on the purchase of a new motor vehicle has expired.
No more state and local sales tax deduction. In 2009, taxpayers who itemized were able to deduct their state sales tax payments instead of deducting their state and local income taxes. This provision ended after December 31, 2009 -- although Congress could decide to extend it.
Roth IRA conversions. In 2010, the rules governing who can invest in a Roth are a bit different. The change, which was signed into law as part of the Tax Increase Prevention and Reconciliation Act of 2005 (TIPRA), allows anyone with an existing traditional IRA to convert to a Roth IRA -- regardless of their income -- for one year. The tax attributable for any such conversion will be paid in 2011 and 2012. The rules that otherwise govern establishing and making contributions to new Roth IRAs will not change.
Homebuyer's Tax Credit payback begins. For 2009, the first-time home buyer's credit was a flat out credit -- no repayment required. However, the first iteration of the bill, which was part of the Housing and Economic Recovery Act of 2008, required the repayment of the credit over a period of 15 years. For taxpayers who claimed the credit in 2008, repayment begins with the filing of their 2010 tax return.
No change in the gift tax exclusion. Inflation didn't move much at all from 2009 to 2010, which means that the annual gift-tax exclusion of $13,000 also won't change. For 2010, a U.S. taxpayer can give away $13,000 per person (to one person or a million different people -- the exclusion is unlimited) without any tax considerations.
No federal estate tax. When the federal estate tax was repealed -- for one year -- under the Economic Growth and Tax Relief Reconciliation Act of 2001, it was widely believed that Congress would tweak the law to avoid the repeal before we actually made it to 2010. However, in a stunning show of inaction (some are calling it "Congressional malpractice"), Congress has simply chosen to do nothing. The result? No federal estate tax for 2010. But don't get too comfortable: In 2011, the federal estate tax is reinstated with a lower personal exemption ($1 million) and a higher tax rate (55%) than in 2009.
Alternative Minimum Tax (AMT) exemption rollbacks. For 2009, the AMT exemption was $46,700 for individual taxpayers; $70,950 for married taxpayers filing jointly or for qualifying widow(er)s; and $35,475 if married filing separately. But for 2010, these exemption amounts will drop back to $33,750 for single taxpayers; $45,000 for married taxpayers filing jointly or for qualifying widower(s); and $22,500 if married filing separately in 2010. The scaled back exemption rate is expected to affect a whopping one in five taxpayers.
No change in the Medicare tax (yet). The health care reform bill pushed through a number of tax provisions affecting employers and individual taxpayers. Most of the changes, however, including an additional Medicare tax on higher-income individuals, won't kick in until 2013. There is no change for 2010.
Unemployment income tax breaks expire. For 2009, unemployed taxpayers who received related benefits could exclude up to $2,400 from their taxable income. Unless Congress votes to change the law for 2010, this tax benefit will no longer be available.
See full article from WalletPop
This comment has been removed by the author.
ReplyDeleteI just finished paying about 1500.00 to the state and about 200.00 of that were in penalties. Imagine this is CT where our last governor was pardon on charges of Tax evection over millions. This is a Republican state.
ReplyDelete