1 NTTC 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

2 NTTC 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

3 NTTC 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

4 NTTC 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

5 NTTC 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

6 NTTC TRAINING 2010 Estate Tax, Basis & Holding Period  Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) repealed estate tax after December 31, 2009 and before January 1, 2011  Basis of assets inherited from decedent dying in 2010 is the lesser of the decedent’s adjusted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’

7 NTTC 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

8 NTTC 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

9 NTTC 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 $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

10 NTTC 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

11 NTTC 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

12 NTTC 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

13 NTTC TRAINING 2010 QUESTIONS? COMMENTS?