The following is a list of changes to the tax law for tax year 2010 that will impact individual taxpayers:

New Tax Laws for Tax Year 2010 For 2010, capital gains tax rates are 15% for taxpayers in the 25% or higher income tax brackets and 0% for taxpayers in the 10% or 15% tax brackets. The “kiddie tax” applies to all children who have not reached 18 in 2010 and to dependent “student” children up to the age of 24. Dependent children under age 18 in 2009 and dependent "student" children under 24 that have investment income greater than $1,700 may be subject to a tax based on their parent's income. If you do not file your return by the due date (including extensions) you may have to pay a failure-to-file penalty. For income tax returns required to be filed after 2010, the failure-to-file penalty for returns filed more than 60 days after the due date (including extensions) is increased. In this situation, the minimum penalty is the smaller of $135 or 100% of the unpaid tax. The energy efficient home improvement credit is available for individuals to claim on their individual tax returns for energy-saving home improvements. Homeowners who make certain home improvements and equipment purchases may be entitled to a tax credit, a dollar-for-dollar reduction in your tax bill, of up to $500. The tax credit is available for qualifying property that is certified by the manufacturer as meeting energy-saving standards. In other words, you get a tax break while cutting your energy costs. These credits are available for the 2011 & 2012 tax years. If you would like to learn more about these energy tax credits, please contact us for more information. The rules surrounding charitable contributions of cash and clothing changed in 2007 and still apply for 2010. All cash contributions made in 2010 to any qualified charity must be supported by a dated bank record or a dated receipt. No deduction is allowed for most contributions of clothing and household items made in 2010 unless the donated property is in good used condition or better. Also, if your contribution entitles you to merchandise, goods, or services, including admission to a charity ball, banquet, theatrical performance, or sporting event, you can deduct only the amount that exceeds the fair market value of the benefit received.

Individual Tax Information, Deductions and Credits The “Manufacturers Deduction” is available again this year. It is available to businesses and self-employed individuals in the amount of 9% of Qualified Domestic Production Activities Income. If you think this might apply to you, please mention it when you are meeting with us. For 2010, there is still a tax credit up to a maximum of $2,400 for the purchase of electric and alternative motor autos (i.e. hybrids).If you purchased a hybrid, please let us know and we can calculate the amount of the credit available for you. The standard mileage rate increased to 50 cents a mile for all business miles driven in 2010. The mileage rate for business miles driven increases to 51 cents for 2011. License plate fees can be deducted in addition to the mileage deduction. If you are unable to file a timely return this year you can file Form 4868 by April 15 to receive an additional 6 month extension fo time to file your return. This is the only extension available to individuals this year. Remember, this is only an extension to file your return, it is not an extension to pay any tax due. Even though the Alternative Minimum Tax exemption amount has increased, more taxpayers will be subject to this controversial tax than ever before. We can discuss if and how this may affect you when we meet.

2010 Limits, Increases, and Phase Outs The Standard Deduction Increased for 2010 Head of Household - $8,400 Married Filing Joint/Qualifying Widow(er) - $11,400 Married Filing Separately - $5,700 Single - $5,700 The amount you can deduct for each exemption is $3,650 in 2010. For 2010, the Hope credit is not available. However, you may be able to claim an American opportunity or lifetime learning credit. The amount of the American opportunity credit (per eligible student) is the sum of: 100% of the first $2,000 of qualified education expenses you paid for the eligible student, and 25% of the next $2,000 of qualified education expenses you paid for that student. Individuals that do not claim the education credits can claim the tuition and fees deduction up to $4,000 in 2010. If your modified adjusted gross income is less than $65,000 ($130,000 MFJ), your maximum tuition and fees deduction will be $4,000. If your modified adjusted gross income is greater than $65,000 ($130,000 MFJ) but less than $80,000 ($160,000 MFJ), your maximum tuition and fees deduction will be $2,000. If your modified adjusted gross income is greater than $80,000 ($160,000 MFJ), no tuition and fees deduction will be allowed.

Retirement Plan & Health Savings Account Information Contribution Limits for Retirement Plans Traditional IRA and Roth IRA - $5,000 ($6,000 if 50 or over) 401(k) - $16,500 ($22,000 if 50 or over) SEP - $49,000 or 25% of participants compensation generally limited to $245,000 SIMPLE - Lesser of $11,500 ($14,000 if 50 or over) or total compensation You can deduct contributions made to a traditional IRA on your individual tax return. However, if you or your spouse is covered by an employer retirement plan, the amount of your deduction may be limited to the following: If neither you or your spouse is covered by an employer plan, you can take a deduction for total contributions to one or more of your Traditional IRA's of up to the lesser of $5,000 ($6,000 if over 50) or your total compensation. If you are not covered by a retirement plan but your spouse is, then you are eligible for the full deduction if your Modified AGI is less than $167,000, a partial deduction if your Modified AGI is more than $167,000 but less than $177,000, and no deduction if your Modified AGI is more than $177,000. If you and your spouse is covered by an employer plan, then you can take the full deduction if your Modified AGI is less than $56,000 ($89,000 Married Filing Joint), a partial deduction if your Modified AGI is more that $56,000 but less than $66,000 ($89,000 and $109,000 for Married Filing Joint), and no deduction if your Modified AGI is more than $66,000 ($109,000 Married Filing Joint). If you are filing Married Filing Separate, then you are only elegible for a partial deduction if your Modified AGI is less that $10,000. Individuals have until April 15th of the following year to make a deductible contribution to an IRA for the current year. There is no deduction available for contributions to a Roth IRA, however, all earnings can be withdrawn tax-free after you reach retirement age. Generally, you can contribute to a Roth IRA if your Modified AGI is less than $105,000 ($167,000 for Married Filing Joint). A new tax law allows for the conversion of Traditional IRA's to Roth IRA's for individuals without any Modified AGI limitations during tax year 2010 and beyond. Retirement Savings Contribution Credit You may be able to take a tax credit if you make eligible contributions to a qualified retirement plan or IRA. The maximum credit available is $1,000 ($2,000 for Married Filing Joint). The credit is subject to phase-out at certain Modified AGI levels. For 2010, the maximum Health Savings Account (HSA) deduction is $3,050 ($6,150 for family coverage). The maximum additional deduction for individuals age 55 or older increased to $1,000. For HSA purposes, the minimum annual deductible of a high deductible health plan increased to $1,200 ($2,400 for family coverage) and the maximum annual deductible and other out-of-pocket expenses limit increased to $5,950 ($11,900 for family coverage).