What's New for Tax Year 2010 (When Filing in 2011)

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The following are select tax topics affecting individuals and businesses for tax year 2010. Some of the provisions, implemented in 2009, continue as noted below.

Individuals Mandatory e-filing: Tax return preparers who file 100 or more federal individual returns are required to e-file those returns. Itemized deductions: The limitation on itemized deductions has been repealed and deductions can be fully utilized without adjusted gross income (AGI) limitations. Personal exemptions: AGI phase-out rules no longer apply for personal exemptions. Alternative minimum tax (AMT): Exemption increased to $47,450 for single taxpayers, $72,450 for joint filers and $36,225 if married and filing separately. Reduced tax rates continue: 2010 tax rates for individuals are 10 percent, 15 percent, 25 percent, 28 percent, 33 percent and 35 percent. Capital gains and qualified dividends: Capital gains and qualified dividends continue to be taxed at a maximum of 15 percent for both the regular tax and AMT purposes. Child tax credit: $1,000 child tax credit amount will continue, instead of reverting to $500. Increased earned income tax credit (EITC) continues: Phase-out of the credit starts at $75,000 for single taxpayers, $110,000 for joint filers and $55,000 if married and filing separately. Refundable child credit continues: Credit equal to the greater of 15 percent of earned income in excess of $3,000. For taxpayers with three or more qualifying children, the credit equals the excess of Social Security taxes for the tax year over the earned income credit for the tax year. Mortgage insurance premiums: Premiums paid in connection with acquisition indebtedness relating to a taxpayer’s qualified residence are deducted as qualified residence interest.

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Published In: Tax Updates