by Mike Morris, editor
With all the income tax law changes over the last few years, this tax season is one of the most confusing in decades. The government has implemented many new laws that affect most Americans' returns. Find out which ones you need to be aware of with our list of 10 frequently asked questions about filing your 2010 income tax return.
I heard around the water cooler that the deadline for filing income tax this year has been changed from April 15 to April 18. Is this true?
Yes. The IRS has extended the deadline to Monday, April 18, this year because Friday, April 15, is Emancipation Day, which is an observed holiday in the District of Columbia. D.C. holidays are treated as federal holidays in that the tax filing deadline cannot fall on a holiday.
Is the first-time homebuyer's tax credit still in effect for 2010?
Yes. Homebuyers who purchased a new home before April 30, 2010, and settled by September 30, 2010, may be eligible for a credit of up to $8,000. To claim the credit, however, you must file a paper tax return and attach Form 5405 and an executed copy of the settlement statement.
Did the standard deduction increase again for 2010?
Only head of household deduction has changed. The standard deduction amounts differ depending on your income tax filing status. Here's the breakdown:
- Single: $5,700
- Head of household: $8,400
- Married filing jointly/qualifying widow(er): $11,400
- Married filing separately: $5,700
Did the government increase the exemption amount for dependents again this year?
Unfortunately, it didn't. The deductible amount for each dependent exemption you can claim on your federal income tax return remains $3,650 in 2010.
My daughter is a full-time college student and I still claim her as a dependent. Can she claim herself when she files her own return?
If you claim your daughter as a dependent on your income tax return, she can't claim herself on hers.
My wife gave birth to our third child last year. Does this mean an increase in the amount of our earned income credit?
In most tax years, it wouldn't. But the American Recovery and Reinvestment Act provided a temporary earned income tax credit increase for tax years 2009 and 2010, for taxpayers with three or more qualifying children. The maximum credit for this new category is $5,657. But you must have earned less than $48,279 in 2010 to qualify.
We installed energy-efficient windows in our home last year and were told by the contractor that we'd be eligible for a tax credit. How much savings can we claim?
You can claim a credit of 30 percent of the cost of your windows, up to $1,500 maximum, on your 2010 income tax return. Labor cannot be included, however — just the cost of the windows.
Are there any new tax laws related to college tuition?
The American Opportunity Tax Credit, which went into effect last year and runs through 2012, allows you to claim a credit of $2,500 per college student. Your modified adjusted gross income must be less than $80,000 ($160,000 for joint filers). If your income tax liability is less than your credit amount, the difference will be refunded to you.
I bought a new car last year and the salesperson said I would be eligible for a tax break. Was that just a sales pitch?
It was a sales pitch. Vehicles purchased new in 2010 are not eligible for tax credits, as they were in 2009.
I just finished doing my taxes and I won't be able to pay what I owe on April 15th. Can I file for an extension?
Anyone can file for an extension, but it only gives you extra time to file your income tax return, not extra time to pay your taxes. If you can't pay your tax on time, you may be able to set up a payment plan, but interest and penalty will be added.
Manage My Life editor Mike Morris wishes he could get an extension on what he owes the IRS this year.
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