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2010 Tax Tips from our December speaker Nila Rakhit

posted Dec 22, 2010, 7:40 PM by netSAW Info   [ updated Dec 22, 2010, 7:44 PM ]

2010 TAX TIPS

HERE ARE SOME 2010 TAX TIPS. SOME OF THESE PROVISIONS MAY BE EXTENDED TO 2012 UNDER THE SENATE BILL THE TAX RELIEF, UNEMPLOYMENT INSURANCE REAUTHORIZATION AND JOB CREATION ACT OF 2010 INTRODUCED DECEMBER 13, 2010.


 From Nilanjana Rakhit, CPA, MBA, MST

Phone: 617-678-4021

 

FOR YOURSELF AND YOUR CHILDREN:

    • MUST REPORT FOREIGN BANK ACCOUNT & FOREIGN TRUST INFORMATION
    • CHILDREN'S UNEARNED INCOME OVER $1,900 TAXED AT PARENT’S RATE
    • ITEMIZED DEDUCTION LIMITATION AND PERSONAL EXEMPTION LIMITATION REPEALED IN 2010.
    • FOLLOWING BENEFITS ARE NOT AVAILABLE FOR 2010
      1. INCREASED STANDARD DEDUCTION FOR REAL ESTATE TAX
      2. $2,400 UNEMPLOYMENT EXCLUSION              
    • FOLLOWING BENEFITS ARE ALSO NOT AVAILABLE FOR 2010  (MAY BE EXTENDED BY SENATE BILL):
      1. EDUCATOR-TEACHER EXPENSES
      2. HIGHER EDUCATION TUITION FEES DEDUCTION
      3. SALES OR EXCISE TAX DEDUCTION FOR PURCHASE OF A VEHICLE
      4. DIRECT CHARITABLE CONTRIBUTION OF IRA PROCEEDS
    • FOLLOWING BENEFITS ARE NOT AVAILABLE AFTER 2010: (UNLESS EXTENDED)

        1.     EMPLOYER PROVIDED EDUCATIONAL ASSISTANCE ($5,250)

         2.    STUDENT LOAN INTEREST DEDUCTION (MAXIMUM $2,500)

         3.    EDUCATION CREDIT(AMERICAN OPPORTUNITY TAX CREDIT-MAXIMUM $2,500)    

         4.  $1,000 CHILD TAX CREDIT  IS SCHEDULED TO REVERT TO $500 AFTER 2010.

         5.   $2,000 CONTRIBUTIONS TO EDUCATIONAL SAVINGS ACCTOUNT FOR UPTO K-12

·         REDUCED USEFULNESS OF FLEXIBLE SPENDING ACCOUNT - EFFECTIVE 2011, DISTRIBUTIONS ARE NOT ALLOWED TO PURCHASE OVER THE COUNTER MEDICATION WITHOUT A PRESCRIPTION.  CONTRIBUTIONS ARE SUBJECT TO "USE OR LOSE" RULES.

 

FOR YOUR HOME:

1.       LIMITATION APPLIES ON $250,000 EXCLUSION ($500,000 FOR JOINT FILERS) ON GAIN FROM THE SALE OF PRINCIPAL RESIDENCE IF THE PROPERTY IS NOT USED AS A MAIN HOME DURING ANY PERIOD WITHIN THE 5 YEAR HOLDING PERIOD.

2.       30% CREDIT UP TO $1,500 ENERGY EFFICIENCY CREDIT IS NOT AVAILABLE AFTER 2010.

3.       REPAYMENT OF HOME BUYER CREDIT OVER 15 YEARS  BEGINS IN 2010 FOR THOSE WHO CLAIMED FIRST TIME HOME BUYER CREDIT IN 2008.  SEE FORM 5405 FOR DETAILS.

4.       IF ELIGIBLE TO CLAIM FIRST TIME HOME BUYER CREDIT IN 2010, AMEND YOUR 2009 TAX RETURN TO CLAIM THE CREDIT.

FOR YOUR RETIREMENT:

    1. OPPORTUNITY FOR CONVERTING YOUR TRADITIONAL IRA TO A ROTH IRA AND MAKING AN ELECTION TO PAY TAX IN 2010 OR SPLIT THE INCOME AND TAXES BETWEEN 2011 AND 2012.
    2. CONTRIBUTION LIMIT:
      1. 401K LIMIT - $16,500 PLUS $5,000 CATCH UP CONTRIBUTION IF OVER AGE 50.
      2. IRA LIMIT - $5,000 PLUS $1,000 CATCH UP CONTRIBUTION IF OVER AGE 50.
    3. ROTH IRA & ROTH 401K
      1. NO CURRENT DEDUCTION
      2. TAX DEFERRED APPRECIATION
      3. TAX FREE DISTRIBUTION IF TAKEN AFTER AGE 59 1/2 AND HELD FOR 5 YEARS

FOR YOUR BUSINESS:

1.       FORM 1099-MISC REPORTING REQUIREMENT FOR LANDLORDS BEGINNING 2011 FOR PAYMENTS OVER $600 TO SERVICE PROVIDERS.

 

2.       SMALL BUSINESS JOBS ACT OF 2010 PROVIDES FOR:

a.        INCREASED IMMEDIATE EXPENSING (SEC. 179) OF INVESTMENTS IN BUSINESS  EQUIPMENTS OF UP TO $500,000 AND QUALIFIED REAL PROPERTY UP TO $250,000.

b.      50% BONUS DEPRECIATION OF QUALIFIED PROPERTY ACQUIRED IN 2010 AND OF LONG-LIVED PROPERTY ACQUIRED IN 2011.  THE PROPERTY MUST BE NEW.

IRS Circular 23 Notice: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for purposes of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

 

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