Here are some important changes you should keep in mind prior to filing your taxes this year.
First, the due date to file your Form 1040 is April 18 instead of the customary 15th deadline. This is due to the Emancipation Day holiday observed in Washington DC falling on the 15th this year. The April 18th return date is applicable whether you reside in the District of Columbia or not.
For 2010, there are no longer any limits on the number of personal exemptions and itemized deductions that you can claim. In other words, you will not lose part to your deduction, irrespective of the actual amount of your adjusted gross income.
Please note however that all unemployment compensation you may have received in 2010 generally is now fully taxable. The exclusion from income of up to $2400 that applied in 2009 has been rescinded and is no longer available.
Home Buyers
First time home buyers should be aware that they cannot in general claim the credit for a home if it was purchased after the 30th of April, 2010. However, they may be able to request it if they entered into a written and binding contract prior to May 1st, 2010, with the intent to buy the home before July 1, 2010, and completed its purchase by the 1st of October, 2010.
In addition, homebuyers who bought a first home in 2008 and claimed the first-time homebuyer credit must in principle start repaying it on their 2010 return. Furthermore, any credit claimed for 2008 or 2009 must generally be repaid if the home was sold in 2010 or ceased being their primary residence that same year.
Vehicle Owners
Tax filers who purchased a new motor vehicle in 2010 should note that the itemized deduction or increased standard deduction for state, local, or excise taxes is no longer available. Taxes incurred in the purchase of a motor vehicle are now to be included in the overall sales tax. An exception will be made if the vehicle was bought after February 16th of 2009 and the tax paid in 2010.
Also, the alternative motor vehicle credit for qualified hybrid motor vehicles purchased after 2009 has expired and is not available for 2010 except for cars or light trucks with a gross weight of 8500 pounds or less.
Finally, the 2010 rate for business use of a vehicle is reduced to $0.50 per mile. Usage of the vehicle to receive medical care or in the move from one place of residence to another is now set at 161/2 cents per mile. This change is due to the reduction in gas prices from 2009 to 2010.
Parents & Heads of Households
Individuals who adopted a child in 2010 should know that the maximum adoption credit has been increased to $13,170. Furthermore, this credit is now fully refundable thus allowing to maximize your tax refund.
If you were self employed after March 30, 2010 and incurred health insurance costs, you may be able to include as part of your health insurance deductions any premiums paid for the care of your child who was under 27 years of age even if the child was no longer your dependent. In addition, the deduction is also allowed on schedule SE therefore reducing the overall self employment tax liability.
Photo via Beverly on Flickr.
