Important Tax Changes to Be Aware of For Your 2010 Tax Filing

Tax laws are complex and can be difficult to summarize for the general public. There are so many different scenarios that may impact tax filing and returns in any given year. It is important to be aware of the tax changes that will have an impact on your tax filing for 2010 that is due April 15th, 2011. It is also a good idea to be aware of tax changes that will happen in 2011 so you can possibly structure your finances to benefit you in the current year or the following year.

The tax laws as they currently stand will bring many changes over the next few years. Just when you think that last year’s tax frenzy is done and over with the time comes again to prepare your tax returns for the upcoming year. Knowing the tax laws and how they affect you is the best measure to ensure that you are following the rules while still maximizing your tax returns.

2010 Changes

2009 was a year of many changes to existing tax law, credits and relief programs. Unfortunately, many of the benefits and deductions that were allowed in 2009 will not be available in 2010.

2010 will offer many changes to federal tax rates, exemptions and deductions. These changes are just the beginning of a series of tax change rollouts that will take place over the next several years. Tax laws change every year and Americans should never assume that because they were afforded an exemption one year that it will remain in effect for the following year.

There are several proposed changes to the tax laws set to be implemented in the 2010 tax year. Although the changes went into effect on the first day 2010, some may still be open to adjustments if Congress acts in favor to extend some of the tax relief that was implemented in 2009.

Changes to the tax laws for 2010

Home and Family

• Home Improvements for energy savings will revert to 10% tax credits in 2010.
• Vehicles purchased new in 2010 are no longer eligible for tax credits.
• Property tax –  for those that do not itemize will be unable to include the standard $1000 deduction from property taxes in 2010.
• Exemptions for married couples filing jointly, head of household and single filers have dropped in 2010.
• The estate tax for those who die in 2010 has been eliminated.
• Those that took advantage of the home buyer’s credit back in 2008 will be required to begin paybacks.

Education and Employment

• Unemployment benefits will no longer carry an initial deduction off of the first $2400 received.
• Deductions for farm losses have been capped beginning in 2010 if you receive certain loans or federal farm aid. The deductions once provided to offset non-farm income is capped at either $300,000 or the net farm income.
• Businesses expenses for equipment and the servicing of equipment that were once deductible have decreased by almost 50%.
• Domestic production deductions increase for businesses that work in certain industries. This also applies to the sale of equipment that is manufactured and sold in the country, with exception of gas and oil.
• Educators who have deducted out of pocket expenses for classroom supplies on tax returns in the past will no longer be able to do this in 2010.
• The deductions provided for tuition for education and fees associated with education are no longer in effect.
• Income earned in a foreign country has an increased exclusion in 2010.
• The earned income tax credit that allowed nontaxable combat pay to be included in tax returns as earned income is no longer in effect.

This list is not all inclusive but it certainly does represent a good number of the changes that will be taking place with some of the important tax laws that affect many Americans.