When Congress starts a new session in January, they will need to revisit some of these tax issues and either kill the provision or extend it for another year. Stay tuned, as we will update you on the activity.

Like all tax information found online, it is subject to change. Please consult a tax professional to discuss your personal situation.

 

More tax content can be found on http://turbotax.intuit.com/

 

The federal estate tax will be eliminated for estates of individuals who die in 2010 unless Congress acts by December 31, 2009 to retain it.

 

Starting in 2010, individuals with any amount of modified Adjusted Gross Income are free to switch a traditional IRA to a Roth IRA. Conversions are fully taxable at your regular tax rate. For conversions in 2010, taxpayers can spread the tax due over two years. Half the tax will be due in 2011, and the remaining half will be payable in 2012. Removing the limit on conversions effectively eliminates the income limit on contributions to Roth IRAs. A taxpayer with income too high to use a Roth will be able to contribute to a traditional IRA (which does not have income limits for contributions) and immediately convert to a Roth.

 

State and Local Sales Tax Deduction
The opportunity for itemizers to choose to deduct their state sales tax payments instead of deducting their state and local income taxes ends after 2009, unless Congress extends it.

 

This deduction for classroom supplies purchased by educators lapses after 2009, unless Congress extends it.

 

The deduction for up to $4,000 of college tuition and fees expires after 2009, unless Congress extends it.

 

Beginning in 2010, the opportunity for IRA owners age 70½ to directly donate part of their IRA balance to charity will disappear, unless Congress extends it.

 

Starting in 2010, non-itemizers will no longer be allowed to increase their standard deduction by up to $1,000 of property taxes paid, unless Congress extends this break.

 

The maximum amount of equipment placed in service that businesses can expense drops by nearly 50%, to $135,000 from $250,000 previously.

 

The tax rate on capital gains from the sale of assets held longer than one year remains at 0% for people in the 10 percent or 15 percent tax brackets. The 15 percent maximum tax rate on long-term capital gains for taxpayers in higher brackets also remains the same. However, these rates are scheduled to increase in 2011.

 

Similarly, the special 5 percent maximum rate on dividends of taxpayers in the 10 percent and 15 percent tax brackets remains at zero percent through 2010.

 

For 2010, the exemption levels drop to $45,000 for married filing jointly, $33,750 for singles and heads of household, and $22,500 for married couples filing separately. Congress, can, however, act in 2010 to extend the relief that was available in 2009.

 

For 2010, the first $2,400 of unemployment benefits you receive is no longer tax-free.

 

Beginning in 2010, buyers of new vehicles no longer get a tax benefit for sales tax paid on new vehicles, unless they itemize and elect to deduct sales taxes instead of state income taxes.