Tax laws changed in 2010

(The Money Pros) - Including the Health Care Act passed in March of 2010, there were five major and several minor pieces of tax legislation that were passed last year. It was a tough year to keep up with but there are several issues to be aware of.

First, review deductions for health insurance for self-employed individuals for 2010. For 2010, self-employed individuals will be allowed to deduct the cost of health insurance for purposes of reducing their income tax and self-employment tax. In the past, self-employed individuals could not deduct the full cost of their health insurance for purposes of calculating self-employment tax. This provision is currently only in effect for 2010 and could represent significant tax savings.

There were several tax incentives enacted for businesses as well. TRA 2010 allows businesses to deduct 100 percent of the cost of qualified property acquired and placed in service after Sept. 8, 2010, and before Jan. 1, 2013. Limits on Section 179 Expense Deductions have also been increased.

There are also several changes that individual taxpayers should be aware of. These included increased deductibility of itemized deductions and exemptions. Phase-outs for deductibility of itemized deductions and exemptions have been eliminated for 2010. This will help higher income earners.

The Tax Reform Act of 2010 also postponed reductions to the child tax credit, which remains at $1,000 for qualified taxpayers. Certain provisions of the tuition and fees deduction and student loan interest deductions that were scheduled to expire in 2010 were also extended.

Viewers who were affected by the terrible flooding that occurred in March 2010 should also be sure to review casualty loss options. It’s important to note that there is an April 18, 2011, deadline for amending 2009 tax returns for flood-related losses, not the normal 3 years that filers normally have for amending returns.

For more information on changes that may affect you 2010 tax return please consult the IRS website at www.irs.gov.