Even though tax season might seem like a long way off, April 15 is closer than you think. Instead of putting aside your 2010 taxes for the next few months, do yourself a favor and be aware of the changes that will affect you before the year ends.
For your convenience, we’ve gone through the IRS website and extracted the changes you’ll need to know about.
Lower Deductions For Business And Medical Mileage
If you commute daily by car, you are still unable to write off this cost, but you can deduct other work-related mileage at a rate of 50 cents per mile (5 cents lower than in 2009). If you operate your car for medical reasons, you will be reimbursed 16.5 cents per mile, 7.5 cents less than 2009. Any mileage accrued for charitable purposes is deducted at 14 cents per mile, the same as 2009.
New Limits For Property Damage Or Theft
The minimum deduction for damaged or stolen property has lowered to $100, from $500 in 2009.
Deductions For New Vehicle Purchases
If you bought a vehicle between February 17 and December 31, 2009, you can deduct state, local, and excise taxes related to the purchase in your 2010 tax return. If your state has no sales tax, you can instead deduct other taxes or fees the purchase generated. Note that the deduction is only eligible up to $49,500. Also, the eligible deduction amount varies according to your modified adjusted gross income (MAGI).
Tax Benefits From Converting Your Traditional IRA To Roth IRA
Don’t forget 2010 is the only year you are able to convert your traditional IRA to a Roth IRA.
Home improvements made to save energy will revert to 10% tax credits for 2010.
Watch for 2009 deductions and credits that are currently no longer available in 2010. These include:
- Economic recovery payments you received in 2010.
- Deductions for certain tuition and fees for graduate education up to $4,000.
- Up to $2,400 of unemployment benefits.
- Attention teachers: Those who deducted out-of-pocket expenses for classroom supplies on tax returns will no longer be able to do this in 2010.