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Tax Changes for 2011 Return

Despite the length of this list of tax changes, there are many other less significant changes on the horizon. Always consult an accountant or tax professional regarding your specific circumstances. Read more

Tax Changes for 2010 Return

Small Business Health Care Tax Credit 2010
The new health reform law gives a tax credit to certain small employers that provide health care coverage to their employees, effective with tax years beginning in 2010. The following questions and answers provide information on the credit as it applies for 2010-2013, including information on transition relief for 2010. An enhanced version of the credit will be effective beginning in 2014. The new law, the Patient Protection and Affordable Care Act, was passed by Congress and was signed by President Obama on March 23, 2010.

Visit IRS website for Frequently Asked Questions : www.irs.gov
Q: Does the new health care law require workers to pay income tax on the value of employer-provided health insurance? 
A: No. The value will appear on employees’ W-2 forms for information purposes, but will not be considered taxable income.

FULL ANSWER: False information has been circulating regarding the dollar value (cost of what your company pays for your health insurance) will be considered income and added to your gross pay. That information can be added to the list of false claims about the new health care law. It’s true that the value of employer-paid health insurance will be added as an information item on W-2 forms. But contrary to this widely circulating chain e-mail, it definitely will not be considered taxable income.

Visit IRS website for Frequently Asked Questions : www.irs.gov

Tax Changes for 2009 Return

Standard Mileage Rates for 2009
Beginning on Jan. 1, 2009, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

  • 55 cents per mile for business miles driven
  • 24 cents per mile driven for medical or moving purposes
  • 14 cents per mile driven in service of charitable organizations
  • The new rates for business, medical and moving purposes are slightly lower than rates for the second half of 2008 that were raised by a special adjustment mid-year in response to a spike in gasoline prices. The rate for charitable purposes is set by law and is unchanged from 2008.

First-Time Homebuyer Tax Credit
First-time homebuyers have been getting tax credits of up to $8,000 since January 2009 as part of the economic stimulus package. But with that housing program scheduled to expire at the end of November 2009, the House voted to extend it into the spring 2010 — and to expand it to many people who already own homes. Buyers who have owned their current homes at least five years would be eligible, subject to income limits, for tax credits of up to $6,500. First-time homebuyers — or people who haven’t owned homes in the previous three years — could get up to $8,000. To qualify, buyers have to sign purchase agreements before May 1 and close before July 1. The credit is available for the purchase of principal homes costing $800,000 or less, meaning vacation homes are ineligible. The credit would be phased out for individuals with annual incomes above $125,000 and for joint filers with incomes above $225,000.

Qualifying Child
The Fostering Connections to Success and Increasing Adoptions Act of 2008 made significant changes (too numerous to mention) to the definition of a qualifying child and who qualifies for the dependency exemption. Like all other tax changes, you should discuss your situation with your tax advisor to ensure compliance with this act effective 1/1/09.

Unemployment Compensation exclusion
Up to $2,400 of unemployment compensation benefits received in 2009 are excluded from income. The exclusion applies to all taxpayers regardless of total income.

Deduction of State Tax on New Vehicle Purchase
Qualified motor-vehicle taxes paid or accrued in 2009 on or after February 17 through December 31, 2009 may be added to the taxpayer’s basic standard deduction. For states (like Delaware) that don’t impose a state or local sales tax on vehicle purchases, the law allows the 1 time document fee on the vehicle’s purchase to be added to the standard deduction. The taxes or fee is limited to a purchase price of the vehicle up to $49,500.

Cash for Clunkers 
The Consumer Assistance to Recycle and Save Act (CARS) enacted June 24, 2009 specifically states the credit of $3,500 – $4,500 toward the purchase of a new vehicle (with clunker trade-in), is not income to the purchaser.
2009 Social Security Changes
Cost-of-Living Adjustment (COLA): Based on the increase in the Consumer Price Index (CPI-W) from the third quarter of 2007 through the third quarter of 2008, Social Security and Supplemental Security Income (SSI) beneficiaries will receive a 5.8 percent COLA for 2009. Other important 2009 Social Security information can be viewed by clicking and downloading the following document. COLAfacts2009.pdf

Tax Changes for 2008 Return

IRS Increases Mileage Rates through Dec. 31, 2008
WASHINGTON — The Internal Revenue Service today announced an increase in the optional standard mileage rates for the final six months of 2008. Taxpayers may use the optional standard rates to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes. Read more