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Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010

Taxpayers will see a variety of benefits impacting several different tax years under new legislation signed into law on Dec. 17, 2010.

Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010. These include:

  • A Two Percent Employee Payroll Tax Cut — The legislation includes an employee-side payroll tax cut for over 155 million workers, providing tax relief of about $112 billion in 2011 paychecks.
  • Extension of Unemployment Benefits — The legislation extends emergency unemployment benefits at their current level for 13 months, preventing an estimated 7 million workers from losing their benefits over the next year as they search for jobs.
  • The Child Tax Credit — The $3,000 refundability threshold established in the Recovery Act for the Child Tax Credit will be extended, ensuring an ongoing tax cut to 10.5 million lower-income families with 18 million children.
  • The Earned Income Tax Credit — The legislation continues a Recovery Act expansion of the Earned Income Tax Credit worth, on average, $600 for families with 3 or more children, and reduces the “marriage penalty” faced by working married families. Together, these enhancements to the EITC will help 6.5 million working families with 15 million children.
  • The American Opportunity Tax Credit — The new American Opportunity Tax Credit — a partially refundable tax credit worth up to $2,500 per student per year that helps more than 8 million students and their families afford the cost of college — is continued.
  • 100 Percent Expensing — The legislation temporarily allow businesses to expense 100 percent of certain investments in 2011, potentially generating more than $50 billion in additional investment in 2011, which will fuel job creation.
  • 1603 Renewable Energy Grants — The agreement extends the 1603 program, which provides payments in lieu of renewable energy tax credits and is helping to support tens of thousands of jobs in the wind and solar industries.
eitc

EIC Changes: Preview of Tax Year 2010

EIC or EITC is a refundable tax credit, meaning you can get money back even if you owe no federal income tax or had no tax withheld. And, if you owe tax, it can offset the amount you must pay. Below is a preview of the new 2010 earning limits and maximum credit amounts. This information was valid for the EITC in the 2010 tax year.

 

Note: The 2010 EIC Table is now available.

Earned income and adjusted gross income (AGI) must each be less than:

  • $43,352 ($48,362 married filing jointly) with three or more qualifying children
  • $40,363 ($45,373 married filing jointly) with two qualifying children
  • $35,535 ($40,545 married filing jointly) with one qualifying child
  • $13,460 ($18,470 married filing jointly) with no qualifying children

 

Tax Year 2010 maximum credit:

  • $5,666 with three or more qualifying children
  • $5,036 with two qualifying children
  • $3,050 with one qualifying child
  • $457 with no qualifying children

*The American Recovery and Reinvestment Act (ARRA) provides a temporary increase in EITC and expands the credit for workers with three or more qualifying children. These changes are temporary and apply to 2009 and 2010 tax years.

 

EIC Changes: Preview of Tax Year 2010

Investment income must be $3,100 or less for the year.

The maximum Advance EITC workers can receive from their employers is $1,830.

2010

Important Tax Changes for 2010

This summarizes the important changes that take effect in 2010 that could affect your estimated tax payments for 2010.More information on these and other changes check back as we get closer to the tax season.

 

Earned income credit (EIC). You may be able to take the EIC if:

  • Three or more children lived with you and you earned less than $43,352 ($48,362 if married filing jointly),
  • Two children lived with you and you earned less than $40,363 ($45,373 if married filing jointly),
  • One child lived with you and you earned less than $35,535 ($40,545 if married filing jointly), or
  • A child did not live with you and you earned less than $13,460 ($18,470 if married filing jointly).

The maximum AGI you can have and still get the credit also has increased. You may be able to take the credit if your AGI is less than the amount in the above list that applies to you. The maximum investment income you can have and still get the credit is still $3,100.

 

Important Tax Changes for 2010

Decrease in personal casualty and theft loss limit. Each personal casualty or theft loss is limited to the excess of the loss over $100 (instead of $500). This is in addition to the 10% of AGI limit that generally applies to the net loss.

Disaster losses. The special rules that were in effect in 2008 and 2009 for losses of personal use property attributable to federally declared disasters do not apply to losses occurring in 2010 and later years.

Alternative minimum tax (AMT) exemption amount decreased. The AMT exemption amount is scheduled to decrease to $33,750 ($45,000 if married filing jointly or a qualifying widow(er); $22,500 if married filing separately).

Recapture of first-time homebuyer credit. If you claimed the first-time homebuyer credit for a home you bought in 2008, you must begin repaying the credit in 2010.

IRA deduction expanded. You may be able to take an IRA deduction if you were covered by a retirement plan and your 2010 modified AGI is less than $66,000 ($109,000 if married filing jointly or qualifying widow(er)). If your spouse was covered by a retirement plan, but you were not, you may be able to take an IRA deduction if your 2010 modified AGI is less than $177,000.

Roth IRA income limit. You may be able to make a Roth IRA contribution if your modified AGI is less than $120,000 ($177,000 if you are married filing jointly).

Conversions to Roth IRAs. Beginning in 2010, the modified AGI and filing status requirements for conversions to Roth IRAs are eliminated.Also, for any conversions in 2010, any amounts that would be included as income will be included in income in equal amounts in 2011 and 2012. You can choose to include the entire amount in income in 2010.

 

Expiring tax benefits. The following benefits are scheduled to expire and will not be available for 2010.

  • Deduction for educator expenses in figuring AGI.
  • Tuition and fees deduction in figuring AGI.
  • Increased standard deduction for real estate taxes or net disaster loss.
  • Itemized deduction or increased standard deduction for state or local sales or excise taxes on the purchase of a new motor vehicle.
  • Deduction for state and local sales taxes.
  • The exclusion from income of up to $2,400 in unemployment compensation.
  • The exclusion from income of qualified charitable distributions made from IRA accounts.
  • Government retiree credit.
  • District of Columbia first-time homebuyer credit (for homes purchased after 2009).
  • Extra $3,000 IRA deduction for employees of bankrupt companies.
  • Certain tax benefits for Midwestern disaster areas, including the additional exemption amount if you provided housing for a person displaced by the Midwestern storms, tornadoes, or flooding.

 

Personal exemption and itemized deduction phaseouts ended

Personal exemption and itemized deduction phaseouts ended. For 2010, taxpayers with AGI above a certain amount will no longer lose part of their deduction for personal exemptions and itemized deductions.

tax forms

2009 EIC Table

Here is 2009 Publication 596 – Earned Income Credit. The 2009 EIC Table begins on page 46 of the document.

 

2009 Publication 596 – Earned Income Credit

You can read it online here or optionally download it to your computer at the bottom of the page. Be sure to read through some of the new Earned Income Credit changes before going straight to the 2009 EIC chart. This is the EIC chart for the filing of your 2009 taxes.

Looking for the 2010 EIC Chart?

 

New Rules for 2009 Tax Year

New for tax year 2009, are the additional EITC and income thresholds for a third qualifying child and changes to the uniform definition of a child. For tax years 2009 and 2010, the American Recovery and Reinvestment Act created a new category three or more children, which will provide larger credits to larger families.

The change in the uniform definition of a child adds two new rules to the definition of a “qualifying child.” The child must:

 

  • Be younger than the person claiming the child, unless the child is permanently and totally disabled.
  • Not have filed a joint return other than to claim a refund.

 

Also new for 2009, if a qualifying child can be claimed by both a parent and another person, the other person must have an AGI higher than the parent in order to claim the child for EITC purposes.

 

 

 

vw-jetta

2010 Advanced Lean-Burn Vehicles

Credit Amounts for 2010 Advanced Lean-Burn Vehicles

Model Year Make Model Credit Amount
2010 Audi A3 2.0L TDI Automatic $1,300
2010 Audi Q7 3.0L TDI $1,150
2010 Volkswagen Golf 2.0L TDI 2 door and 4 door automatic $1,700
2010 Volkswagen Golf 2.0L TDI 2 door and 4 door manual $1,300
2010 Volkswagen Jetta 2.0L TDI
(manual and automatic)
$1,300
2010 Volkswagen Jetta 2.0L TDI SportWagen
(manual and automatic)
$1,300
2010 Volkswagen Touareg 3.0L TDI $1,150

2010 Model Year Hybrid Vehicles

Credit Amounts for 2010 Model Year Hybrid Vehicles (as of 10-30-09)

Model Year

Make

Model

Credit Amount

NOTE:

2010

Cadillac

Escalade Hybrid (2WD & $WD)

$2,200

2010

Chevrolet

Malibu Hybrid

$1,550

Silverado Hybrid C15 2WD

$2,200

Silverado Hybrid K15 4WD

$2,200

Tahoe Hybrid C1500 2WD

$2,200

Tahoe Hybrid K1500 4WD

$2,200

2010

Ford

Escape Hybrid 4×2

$3,000

If purchased before 04-01-09: Full Credit Amount

$1,500

If purchased on 04-01-09 and on or before 09-30-09 Credit is 50% ($1500)

$750

If purchased on 10-01-09 and on or before 03-31-10 Credit is 25% ($750)

Escape Hybrid 4×4

$2,600

If purchased before 04-01-09: Full Credit Amount

$1,300

If purchased on 04-01-09 and on or before 09-30-09 Credit is 50% ($1,300)

$650

If purchased on 10-01-09 and on or before 03-31-10 Credit is 25% ($650)

Fusion Hybrid

$3,400

If purchased before 04-01-09: Full Credit Amount

$1,700

If purchased on 04-01-09 and on or before 09-30-09 Credit is 50% ($1700)

$850

If purchased on 10-01-09 and on or before 03-31-10 Credit is 25% ($850)

2010

GMC

Sierra Hybrid C15 2WD

$2,200

Sierra Hybrid K15 4WD

$2,200

Yukon Hybrid C1500 2WD

$2,200

Yukon Hybrid K1500 4WD

$2,200

Yukon Denali Hybrid C1500 2WD

$2,200

Yukon Denali Hybrid K 1500 4WD

$2,200

2010

Mercury

Mariner Hybrid 4×2

$3,000

If purchased before 04-01-09: Full Credit Amount

$1,500

If purchased on 04-01-09 and on or before 09-30-09 Credit is 50% ($1500)

$750

If purchased on 10-01-09 and on or before 03-31-10 Credit is 25% ($750)

Mariner Hybrid 4×4

$2,600

If purchased before 04-01-09: Full Credit Amount

$1,300

If purchased on 04-01-09 and on or before 09-30-09 Credit is 50% ($1,300)

$650

If purchased on 10-01-09 and on or before 03-31-10 Credit is 25% ($650)

Milan Hybrid

$3,400

If purchased before 04-01-09: Full Credit Amount

$1,700

If purchased on 04-01-09 and on or before 09-30-09 Credit is 50% ($1700)

$850

If purchased on 10-01-09 and on or before 03-31-10 Credit is 25% ($850)

2010

Nissan

Altima Hybrid

$2,350