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Kiamichi Tax Center

January 6th, 2010 at 7:28 pm

2010 .::. American Recovery & Reinvestment Act of 2009

The following provisions were made due to the American Recovery & Reinvestment Act of 2009 and the normal Inflation Adjustments that occur each year.  These changes will apply to 2009 and 2010 returns.  Some changes are temporary for these two years alone.

  • Making Work Pay Credit : A credit in the amount of $400 per working individual and up to $800 for married couples may apply to your tax return if your income is over the limit of $6,451.  If your income is below that number, your credit will be figured based on a percentage basis.
  • American Opportunity Credit : Parents and students may qualify for up to $2500 in education credits.  This credit modifies the existing Hope Credit for tax years 2009 and 2010.  Income limits are expanded and required course materials are added to the list of qualifying expenses.
  • Earned Income Credit and Child Tax Credit : EIC is temporarily extended to cover three qualifying children.  The maximum credit is $5657 for three qualifying children.  The earned income formula used in calculating Child Tax Credit was also changed in order to capture more of the lower income families that have not qualified for it in the past.
  • Standard Deduction Increases : Typically the cost of living and other inflation factors will increase the standard deduction on a yearly basis.  This year is no different.  The following will apply for the current season : Single and Married Filing Separate : $5,700; Head of Household : $8,350; Married Filing Joint : $11,400.
  • Unemployment Tax Change : Up to $2,400 of unemployment benefits received in 2009 will not be taxed.  Any amounts remaining over $2,400 will be taxed as usual.
  • New Vehicle Tax Deduction : New car, light truck, van, motor home, and motorcycle purchasers may claim the state or local fees or taxes that are simliar to sales tax regardless of the state’s policies on state sales tax.  This amount can be utilized regardless of whether you itemize on your return or not.
  • State or Local Real Estate Taxes : Amounts paid for real estate taxes may also be claimed on Schedule L without itemizing on your federal return.
  • AMT Exemption Increased for One Year : Married Filing Joint, Qualifying Widows and Widowers : $70,950; Married Filing Separate : $35,475; Single and Head of Household : $46,700.  These amounts will be reduced for the 2010 tax year.
  • Standard Mileage Rates : Business Use – .55 cents per mile; Medical Use – .24 cents per mile; and Charitable Use – .14 cents per mile.
  • Tax Bracket Threshold Change : The threshold separating the 15% and 25% tax bracket is set at $67,900.
  • Dependency Exemption Amount – The current dependency exemption amount is set for $3,650 for each qualifying dependent.  The amount was $3,500 in 2008.

All of the above list can be researched further at the Internal Revenue Service website.

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