Along with the arrival of 2010 comes various income tax law changes that are highlighted below.

Individual Taxpayers

The unpopular alternative minimum tax (the “AMT Tax”) still exists, but the exemption amount has been reduced. The AMT Tax exemption amount for 2009 was $46,700 for single filers, $70,950 for married taxpayers filing jointly or a qualifying widow or widower, and $35,475 for married taxpayers filing separately. For 2010, these exemption amounts have dropped to $33,750 for single filers, $45,000 for married taxpayers filing jointly or a qualifying widow or widower, and $22,500 for married taxpayers filing separately; Required minimum distributions had been waived for 2009 but are again required for 2010; The income limit on eligibility to convert a traditional IRA to a Roth IRA has been eliminated (see the related article in this newsletter for more detail); The phase-out of the personal exemption and of itemized deductions based on the taxpayer’s adjusted gross income is eliminated in 2010; With the repeal of the Federal Estate Tax, the rules for increasing the cost basis of assets passing from a decedent have changed (see the related article in this newsletter for more detail); Any taxpayer who claimed the first-time homebuyer credit must begin to repay that credit if the taxpayer disposes of the taxpayer’s residence before the end of the fifteen-year recapture period; The ability to claim either an itemized deduction or an increased standard deduction for state or local sales or excise taxes on the purchase of a new motor vehicle has expired; The tax deduction for qualified tuition and related expenses and the $250 tax deduction for education professionals for certain expenses have both expired; Taxpayers who are older than 70.5 years of age may no longer make a tax-free distribution from an IRA to a charity.