Here is a summary of some significant changes to the tax law for 2010 taxes. For additional detail on these deductions, visit www.irs.gov.
Three extra days to file and pay. You have until Monday, April 18, 2011, to file your 2010 returns and pay any taxes due. You get the extra time because Emancipation Day, which is a holiday in the District of Columbia, is observed on Friday, April 15.
Special charitable contributions for certain IRA owners. This provision, available through the end of 2011, allows an IRA owner age 70-1/2 or older to directly transfer, tax-free, up to $100,000 per year to eligible charities.
More people qualify for Roth IRA conversions. Income limits no longer apply to rollovers or conversions to Roth IRAs from other retirement plans.
No more income limits for exemptions and itemized deductions. Overall income limits for personal and dependency exemptions and itemized deductions no longer apply. Before 2010, taxpayers whose incomes were above certain levels lost part or all of their exemptions and part of their itemized deductions.
Adoption credit expanded. The maximum adoption credit for 2010 is to $13,170 per child, up from $12,150 in 2009. The credit is refundable, which means that eligible taxpayers can get the credit even if they owe no tax.
Health insurance deduction reduces self employment tax. In 2010, eligible self-employed individuals can use the self-employed health insurance deduction to reduce their social security self-employment tax liability in addition to their income tax liability.
First-time homebuyer credit. Taxpayers who claimed the first-time homebuyer credit for a home bought in 2008 must generally begin repaying it on the 2010 return.
Deduction for corrosive drywall. Taxpayers may claim a casualty loss deduction for amounts paid to repair damage to their homes and household appliances resulting from corrosive drywall.
Standard mileage rates for 2010. You can expense auto mileage at the following rates:
- Business use — 50 cents per mile
- Medical — 16.5 cents per mile
- Moving — 16.5 cents per mile
- Service for charitable organizations — 14 cents per mile
AMT exemption increased. For tax-year 2010, the alternative minimum tax (AMT) exemption increases to the following levels:
- $72,450 for a married couple filing a joint return and qualifying widows and widowers, up from $70,950 in 2009
- $36,225 for a married person filing separately, up from $35,475 in 2009
- $47,450 for singles and heads of household, up from $46,700 in 2009
Tax breaks extended. Several tax breaks that expired at the end of 2009 were renewed and can be claimed on 2010 returns. They include the following:
- State and local general sales tax deduction, primarily benefiting people living in areas without state and local income taxes.
- Higher education tuition and fees deduction benefiting parents and students.
- Educator expense deduction for kindergarten through grade 12 educators with out-of-pocket classroom expenses of up to $250.
- District of Columbia first-time homebuyer credit.
