Tax Changes for 2010
Homebuyer Credits
Homebuyer Credits have been extended
Residential Energy Property Credit
You can now be rewarded for making your home more energy efficient. The credit which expired in 2007 was reinstated in 2009. The amount of the credit was increased from 10% to 30%, with a maximum credit of $1500 for 2009 and 2010 cumulatively, of the cost of the following energy improvements:
Certain high efficiency heating and air conditioning systems, water heaters and stoves that burn biomass all qualify, including the cost of installation.
Energy efficient windows and skylights, energy efficient doors, qualifying insulation and certain roofs qualify for the credit, however the cost of installation of these items does not qualify.
Residential Energy Efficient Property Credit
This credit equals 30% of what a homeowner spends on qualifying property such as solar electric systems, solar hot water heaters, geothermal heat pumps, wind turbines, and fuel cell property. Labor costs are included when you calculate this credit. And, this year, there is no cap on the amount of credit available, except on fuel cell property. Be sure you check the manufacturer’s tax credit certification statement before purchasing these improvements.
Standard deductions for 2010
Joint return or surviving spouse $11,400
Single $5,700
Head of household $8,400
Married filing separately $5,700
Increased Standard Deduction
You may be able to increase your standard deduction by:
- the amount paid for sales or excise tax on the purchase of certain new cars, trucks, motorcycles, or motor homes
- a net disaster loss attributable to a federally declared disaster
Standard mileage rates
50 cents a mile for business miles
19 cents a mile for medical miles
19 cents a mile for deductible moving expenses
14 cents a mile for charitable miles
Refundable Credits
Certain tax credits are Refundable credits, whereby they can be refunded to you if the credit exceeds your tax liability. Meaning, that if the tax credit brings you to zero tax, you can get the balance of the credit refunded to you. Nonrefundable credits can bring your tax liability to zero, but the balance of the credit is not refundable to you.
Making Work Pay Credit
You can claim a refundable credit of up to $400 ($800 for married filing jointly) if you work either as an employee or in self employment. The credit is 6.2% of your earned income up to the limit above. Note however the credit is phased out if your modified adjusted gross income is more than $75,000 ($150,000 if married filing jointly). Last year employers were given new tax tables to used based on this credit, effectively increasing your take home pay by $10 a week or so. The people who may be in trouble with this are those who work more than one job, or married people with combined income over the threshold. To see if you may fall into this category, check out the link http://www.irs.gov/newsroom/article/0,,id=204447,00.html
Education Credit Expanded
The 2009 Recovery Act made some temporary changes to the education credits:
1. Now called the American Opportunity Tax Credit
2. Increased AGI phase out range to $80,000-90,000 for Single or Head of Household and $160,000-180,000 for Married Joint
3. Maximum credit is $2500
4. Credit is now available for the first 4 years of post-secondary education
5. 40% of the credit is now refundable
6. Required course materials are now included along with tuition and fees
