Transcript Slide 1

What's New in 2010?
What are we going to cover:
 New In-scope Changes
 Economic Recovery Act
 New tax provisions in 2010
 Extenders
 Expiring Tax Benefits
 Other items affecting tax preparation
in 2010
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IRS In-scope Changes
for VITA-TCE
 Schedule C – up to $10,000 expenses
– same rules as Schedule CEZ (no
losses, no employees, no inventory)
 Schedule K-1 - royalties
 Two new “on-line” training modules
and tests:
 HSA – Health Savings Accounts
 COD – Cancellation of Debt
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In-Scope/Competencies being Tested
 Basic – 30 questions – two full
returns and one completed return to
be QR (18 Competencies Tested)
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10 on Credits (EIC, CTC, ACTC, MWPC);
5 on QR;
7 on Dependency/Filing Status;
8 on various issues including std ded, adjustments,
tax due, purchase savings bonds, taxable social
security
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In-Scope/Competencies being Tested
(continued)
 Intermediate – 20 questions – two full returns
(11 Competencies Tested)
 5 on Itemized Ded; 4 on Sch C/CEZ; 4 on Educ Credit
and Adjustments;
 7 on energy credit, taxable pensions, and payments
 Advanced – 15 questions – one full return
(8 Competencies Tested)
 8 on Sch D and sale of home;
 7 on taxable pensions, foreign tax, and amended
returns
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Economic Recovery Payment
 Some SS recipients will receive $250
ERP in 2010
 If did not receive in 2009 when first eligible,
 i.e. social security, ssi, railroad retirement,
or veterans disability benefits in November
2008, December 2008, or January 2009
 Any Making Work Pay Credit will be
reduced in 2010 by this payment
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Estate Tax,
Basis & Holding Period
 Economic Growth and Tax Relief Reconciliation
Act of 2001 (EGTRRA) repealed estate tax after
December 31, 2009 and before January 1,
2011
 Basis of assets inherited from decedent dying
in 2010 is the lesser of the decedent’s adjusted
basis or fair market value
 Basis is treated as a gift
 Automatic “more than one year” or long term
holding period does not apply
 Date of acquisition will be same as decedents’
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Other ARRA Provisions in 2010
 First time homebuyer credit extended closing
on purchase of home to September 30, 2010, if
purchased before April 30, 2010; eligible for up
to $8,000 credit
 New motor vehicle purchased in 2009 (after
Feb 16, 2009 and before Jan 1, 2010) but did
not pay sales taxes until 2010 – are eligible to
deduct the amount paid in 2010
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New Provisions in 2010
 Adoption Tax Credit of 2010 – made fully
refundable in 2010
 Qualified expenses up to $13,170 for both special
and non-special needs adoptions
 Affordable Care Act of 2010 – expands
exception to exclude forgiven state loans from
income of certain qualified medical providers
 Decrease Personal Casualty and Theft Losses –
limited to losses over $100 instead of $500 –
this is in addition to the 10% of AGI limit
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New or Unchanged Provisions in
2010
 Investment income for children remains at $1900;
 Standard deduction for Head of Household increases to $8400
(from $8350) – all other standard deductions remain the
same:
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Single - $5,700
Joint - $11,400
HOH - $8,400
 Exemption amount remains the same in 2010 - $3,650;
 Standard Mileage Rates – for 2010
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Business – 50 cents per mile
Medical and moving – 16.5 cents per mile
Charity – 14 cents per mile
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Earned Income Credit
 Amount of credit increases in 2010:
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One qualifying child – maximum $3050
Two qualifying children – maximum $5036
Three qualifying children – maximum $5666
No qualifying children – maximum $457
 Earned income amount increases in 2010:
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$35,535
$40,363
$43,352
$13,460
(joint
(joint
(joint
(joint
$40,545)
$45,373)
$48,362)
$18,470)
One qualifying child
Two qualifying children
Three qualifying children
No qualifying children
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Other changes or items
 Increases in MAGI for contributions to IRA
 Refund options for purchase of Savings Bonds
 For 2010, in addition to direct deposits can use refund to
purchase savings bonds
 Can purchase up to three I bonds registrations,
 Purchase for themselves, beneficiaries, or co-owners, or
other persons, other than themselves;
 Use Form 8888
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Expiring Tax Benefits
(subject to possible extenders)
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Waiver of Minimum Required Distributions from IRAs’ and
defined benefit plans;
Exclusion of $2400 of unemployment compensation from
income;
Tax free distributions to charity from IRA;
Deduction of educator’s expenses;
Tuition and Fees Deduction from AGI;
Extra $3000 IRA contribution for bankrupt companies;
Increase of Standard Deduction for real estate taxes and disaster
losses;
Increase in Itemized Deduction or Standard Deduction for sales
taxes of purchase of new motor vehicle;
Increase in Itemized Deduction for state and local sales taxes;
Certain tax benefits for Midwestern disaster areas
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QUESTIONS?
COMMENTS?
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