Family Tax Services wants you to be up to date on all the new tax law changes. Below is everything you need to know about 2010 tax law changes wants you to be up to date on all the new tax law changes. 

Social Security Takes a Holiday- You may notice a few extra bucks in your paycheck this year. That’s because the government has reduced the amount of social security tax that is being withheld from your paycheck. Rather than 6.2% of your gross pay withheld, you will only have 4.2% withheld for social security tax.

 

Sales Tax Remains on the Schedule A-  For those who need a boost on their itemized deductions, you will still be able to write of your sales tax paid on the Schedule A.  This includes writing off the purchase of a new vehicle.

 

Teachers/Educators Still Get a Break- Those who teach k-12 and have qualified expenses may still be able to write off the first $250 as an adjustment to income. Before you take this deduction, please make sure that you have the necessary hours in order to claim this expense.

 

Energy Credits are back in….But with less of a bite- While the energy credits for your personal residence have been extended, they have reduced the expense to credit ratio. While the old credit allowed for 30% of qualified expenses, this credit will only give you 10%.

 

The Gift of Giving Still Allowed- You can still take a tax free rollover of $100,000 from your traditional IRA and donate it to a qualified charity. Remember, you cannot take the deduction on the schedule A if you elect to take this tax free distribution.

Mortgage Insurance Still A Write Off- Mortgage insurance premiums remain as an itemized deduction through 2011.

 

Bad News for Non-Itemizers- You will not be able to take property taxes as an increased standard deduction in 2010 forward.

 

Children Are Still a Powerful Write Off- The $1000 child tax credit has been extended for two more years. Your child must be under the age of 17 to qualify.

 

American Continue to Get a Great Break on Education- The American Opportunity Credit has been extended through 2012. Qualified students will continue to get the first one hundred percent of $2000 they’ve spent toward education, followed by 25% of the next $2000. This makes the total credit $2500, of which $1000 is a refundable credit. The credit begins to phase out at $160,000

 

Changes To Coverdell Savings Accounts- Coverdell Savings accounts are now up to $2000 through 2012.

 

Exclude Interest On ESA’s- You may be able to exclude interest from US Savings Bonds as long as you are using them to pay for higher education

 Expanded Definitions on Qualified Tuition Programs- This has been expanded to allow for the purchase of computer software or any additional devices for the computer that are required for higher education.

 

No Hope- The hope credit has been eliminated for 2010.

 

Those With Student Loans….Never Fear- Student loan interest is still deductible up to $2500.

 

No Change for Capital Gains- A very important Bush Tax Cut for many. Long-term capital gains rates remain at 0% and 15%.

 

Adoption Credit Increase- The maximum adoption credit is now $13,170 per child and is a refundable credit. That means you can take the credit even if you owe no tax. The 2009 credit only allowed $12,150 and was non-refundable.

 

EIC Has Increased Again- The maximum amount of earned income credit that a taxpayer can receive has increased again. Here’s the breakdown.

·         $3,050 if you have one child

·         $5,036 if you have two children

·         $5,666 if you have three children

·         $457 if you have no qualifying children

Payroll Tax Credit

Credit for 2008 Home Purchases-  As a reminder, taxpayers who claimed the $7,500 First-Time Home buyer Credit for a home purchased in 2008 are required to begin repaying the credit as an additional tax on their 2010 Federal tax return.

Beginning next month, the IRS will be sending reminder Notice CP03A to the 1.2 million taxpayers who claimed the $7,500