2010 Taxes – Tax Credits and Deductions Changes

New IRS Federal Income Tax Rules for 2010 & Expiring Tax Breaks

Mar 10, 2010
Lena Gott

Will We Get New Tax Credits, Deductions for Taxes? - cohdra with MorgueFile

IRS federal income tax rules will change in 2010; tax deductions may expire & tax credits will go away. Changes to taxes for 2010 include several expiring tax breaks.

Before taxpayers file 2010 taxes in Spring 2011, they should carefully review the individual tax return instructions for important changes. In the 2009 instructions for Form 1040, the IRS listed several changes to expect for the 2010 tax year.

Taxes for 2010 – IRS Federal Income Tax Changes

In this article, find a summary of important changes that apply to 2010 taxes. Also, find out what types of changes to expect from 2009 to 2010 unless Congress takes action on tax breaks set to expire in 2010.

2010 Taxes – Expirations, Increases in Tax Deductions & Tax Credits

The important changes below are slated to take place after 2009. Individuals should be aware of these before filing taxes for the 2010 tax year.

Adjusted gross income (AGI) limitations will no longer affect personal exemptions and itemized deductions
Individuals will be allowed to claim personal casualty and theft losses in excess of $100
IRA deduction will open up to even more taxpayers
Many tax breaks will expire, such as the government retiree credit and the deduction for state and local sales taxes
Maximum allowable AGI will increase in relation to the Earned Income Credit (EIC)
More credits may be taken against alternative minimum tax
The alternative minimum tax (AMT) exemption will decrease
Those who claimed first time home buyer tax credits in 2008 must begin repayment

Track Changes to 2010 Income Taxes on IRS website, irs.gov

Some tax changes aren’t announced until later in the tax year. As 2011 nears and 2010 tax forms are released, taxpayers should look for the IRS to confirm 2010 standard mileage rates. Even if things like personal exemptions and standard deductions don’t change, the IRS will also clarify the applicable 2010 amounts on its website, irs.gov.

2010 Tax Breaks – Certain Deductions for Taxes May Expire

Certain 2009 tax breaks may or may not be around in 2010. Unless Congress takes action, individuals should be aware of the following tax breaks that were available in 2009, yet may not be renewed for 2010 income tax returns:

Additional deduction for state and local property taxes for those who don’t itemize
Deduction for qualified tuition and fees of up to $4,000 for higher education
Deduction of up to $250 in classroom supplies (available to teachers, other educators)
Election to itemize state and local sales taxes instead of state and local income taxes
Up to $2,400 of unemployment benefits excluded from gross income

While the above list is not exhaustive, it points out five popular deductions for taxes that may not be available in 2010. Taxpayers should watch the IRS website for updates on these tax breaks.

Will There be New Tax Deductions & New Tax Credits in 2010?

At any time, the United States government may take action to change items above, such as extending certain tax benefits or re-establishing income limitations on deduction for taxes. This makes it doubly important for individuals to stay abreast of recent tax law changes as they appear in the 2010 tax return instructions regardless of what the 2009 instructions state.

Resources:

Instructions for Form 1040 (2009 version)

Last-Chance Opportunity: 22 Tax Breaks That Expire in 2009 by Terry Myers and Dee DeScherer. Retrieved from accountant.intuit.com on March 10, 2010.

Update: Obama Signs 2010 Tax Bill Into Law - Tax Cuts Extended Until 2012