1NTTC TRAINING 2010

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

2NTTC TRAINING 2010

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

3NTTC TRAINING 2010

In-Scope/Competencies being Tested

Basic – 30 questions – two full returns and one completed return to be QR (18 Competencies Tested) 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

4NTTC TRAINING 2010

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

5NTTC TRAINING 2010

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

6NTTC TRAINING 2010

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Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) repealed estate tax after December 31, 2009 and before January 1, 2011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’

7NTTC TRAINING 2010

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

8NTTC TRAINING 2010

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

9NTTC TRAINING 2010

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: Single - $5,700 Joint - $11,400 HOH - $8,400

Exemption amount remains the same in 2010 - $3,650;

Standard Mileage Rates – for 2010 Business – 50 cents per mile Medical and moving – 16.5 cents per mile Charity – 14 cents per mile

10NTTC TRAINING 2010

Earned Income Credit Amount of credit increases in 2010:

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: $35,535 (joint $40,545) One qualifying child $40,363 (joint $45,373) Two qualifying children $43,352 (joint $48,362) Three qualifying children $13,460 (joint $18,470) No qualifying children

11NTTC TRAINING 2010

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

12NTTC TRAINING 2010

Expiring Tax Benefits(subject to possible extenders)

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

13NTTC TRAINING 2010

QUESTIONS?

COMMENTS?