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 Tax Planning Tips Specific to 2010 ONLY

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Victor Quinn
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Join date : 2010-08-25
Location : Central New Jersey

PostSubject: Tax Planning Tips Specific to 2010 ONLY   11/13/2010, 17:31

There are several tax breaks that expire at the end of 2010.
The advice here is to take the tax break while you can.

•Energy efficient home improvement credit expires at end of 2010. Certain types of energy-efficient home repairs can result in a federal tax credit. Replacing windows, doors, and replacing HVAC system and installing new insulation all count towards this tax credit.

Hybrid vehicle tax credit expires for all models.

•Guaranteed 15% maximum rate for long-term capital gains. For 2011, the top rate might go back to 20% for long-term gains. Qualified dividends lose their preferred tax rate and revert back to being taxed at ordinary income tax rates.

Child and dependent care tax credit will be reduced starting in 2011. For 2010, the child care credit is available for the first $3,000 of day care expenses for one child and the first $6,000 of day care expenses for two children, with the maximum tax credit set at 35% of expenses. For 2011, the credit will be limited to the first $2,400 of expenses for one child and $4,800 of expenses for two children, with the maximum credit being 30% of expenses.

•Child tax credit at $1,000 per child. For 2011, the child tax credit will revert to $500 per child.

•Computers as a qualified expense for section 529 college savings plans expires at the end of 2010.

Earned income credit for third child ends in 2010. For 2011, the EIC will be based on at most two children.

Student loan interest deduction is scheduled to change. Beginning in 2011, interest paid on a student loan will be deductible only for the first 60 months of repayment, and the phase out range will start at $40,000 (or $60,000 for married couples filing jointly).

•American Opportunity tax credit for undergraduate education expires at the end of 2010. It will revert back to being the Hope credit for the first two years of undergraduate education.

*Making Work Pay tax credit expires at the end of 2010
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