1. TAX LAW UPDATES FOR TAX YEAR 2010
Tax Law Updates for FS 2011
TAX LAW UPDATES
FOR TAX YEAR 2010
Rev

2. Personal/Dependency Exemption
Tax Law Updates for FS 2011
Personal/Dependency Exemption
No increase - $3,650
Rev

3. Tax Law Updates for FS 2011 Standard Deduction: Single - $5,700
Married filing separately - $5,700
Head of household - $8,400
only increased $50
Married filing jointly/Qualifying widow(er) - $11,400

4. Tax Law Updates for FS 2011 Mileage Rates: Business Miles - 50 cents
Medical or Moving Miles – 16.5 cents
Charitable Miles cents

5. Tax Law Updates for FS 2011
Making Work Pay Credit

6. Making Work Pay Credit
Maximum credit is $400 ($800 if married filing jointly)
Credit is refundable
Credit limited to 6.2% of earned income
Can be employee or self-employed
Phased out over modified AGI range of $75,000-$95,000 ($150,000-$190,000 if married filing jointly)
Available for tax year 2010

7. Making Work Pay Credit (continued)
Taxpayer must have a social security number; if married filing jointly, at least one spouse must have SSN
Not available to nonresident aliens, individuals who can be claimed as dependents on someone else’s tax return, or estates and trusts

8. 1040 pg. 2
Line 63

9. Making Work Pay Credit

10. Making Work Pay Credit (continued)
Any Making Work Pay Credit
must be reduced for taxpayers
that received an
Economic Recovery Payment
in 2010
Some individuals may have received a $250 Economic Recovery Payment in 2010 if they did not receive an economic Recovery payment in 2009 but were recipients of social security benefits, supplemental security income, railroad retirement benefits, veteran disability compensation, or pension benefits in November 2008, December 2008, or January 2009 10

11. Earned Income Tax Credit
Tax Law Updates for FS 2011
Temporary increase in
Earned Income Tax Credit
(EITC)

12. Earned Income Credit
Credit percentage increases from 40% to 45% for families with 3 or more children (maximum credit is now $5,657)
Phase-out amount for married taxpayers filing jointly increases from $3,120 to $5,000

13. Earned Income Tax Credit (EITC) for Tax Year 2009
No. of Children
Maximum Credit
Earned Income/ AGI Each Less Than
$457
$13,460* 1
$3050
$35,535* 2
$5036
$40,363*
3 or More+
$5666
$43,352*
Taxpayers with investment income of more than $3,100 are not eligible for the credit.
*Increase these amounts by $5,010 for joint return filers. And/or by the 30% additional amount for NYS credit.

14. EITC Awareness Day 2010
Friday, January 28, 2011, EITC Awareness Day events
News conferences or news releases to raise awareness of EITC and free tax preparation services
Most volunteer return preparation sites will be open by EITC Day
More than 60 percent of all EITC tax returns are filed during the month of February
Don’t forget to let your IRS SPEC Relationship Manager know how you plan to participate.

15. American Opportunity Credit
Tax Law Updates for FS 2011
American Opportunity Credit

16. Tax Law Updates for FS 2011
Student in first four years of post-secondary study
Must be enrolled in 2010 in a program that leads to a degree or similar
American Opportunity Tax Credit
Student in first four years of post-secondary study
Must be enrolled in 2010 in a program that leads to a degree or similar
At least ½ the normal full-time workload
Can’t have been convicted of felony of controlled substance
Up to $2500 per student
100% of first $2000 and 25% of second $2000
40% is refundable credit (up to $1000) 16

17. Tax Law Updates for FS 2011 Up to $2500 per student
100% of first $2000 and 25% of second $2000
40% is refundable credit (up to $1000)
American Opportunity Tax Credit
Student in first four years of post-secondary study
Must be enrolled in 2010 in a program that leads to a degree or similar
At least ½ the normal full-time workload
Can’t have been convicted of felony re controlled substance
Up to $2500 per student
100% of first $2000 and 25% of second $2000
40% is refundable credit (up to $1000) 17

18. 1040 Page 2
Line 66

19. Tax Law Updates for FS 2011 Temporary increase in
refundable portion of
Child Tax Credit

20. Additional Child Tax Credit
The earned income threshold generally needed to qualify for the additional child tax credit decreases from $8,500 to $3,000
More people will qualify for the credit
Lower threshold applies in 2009 and 2010

21. Tax Law Updates for FS 2011
First-Time
Homebuyer Credit

22. First-Time Homebuyer Credit
Extended closing deadline from June 30, 2010 to September 30, 2010
Purchased a qualifying home by April 30, 2010 and settle by September 30, 2010
Legislation enacted in July 2010 extended the closing deadline from June 30,2010, to September 30,2010.
Eligible homebuyers who purchased a qualifying home by April 30, 2010 and settle by September 30, 2010 may be eligible for a credit up to $8,000.
Documentation requirements apply
ARRA provision extends the existing homebuyer credit for qualifying home purchases to purchases before December 1, 2009

23. First-Time Homebuyer Credit (continued)
May be eligible for a credit up to $8,000
Documentation requirements apply 23

24. First-Time Homebuyer Credit (Continued)
For purchases made in 2008, repayment of the credit over a 15-year period begins with the 2010 tax return.
Minimum payment of $500

25. Form 5405 page 2

26. Tax Law Updates for FS 2011
Medicare Part D Coverage Gap “donut hole” Rebate – $250
More information can be found on
The Affordable Care Act of 2010 provides a one-time $250 rebate in 2010 to assist Medicare Part D recipients who have reached their Medicare drug plan’s coverage gap. This payment is not taxable. This payment is not made by the IRS. More information can be found at

27. Residential Energy Credits
Tax Law Updates for FS 2011
Residential Energy Credits

28. Residential Energy Credits
Extension and modification of credit Nonbusiness energy property: Form 5695, Part I
Amount of credit increases from 10% to 30%
Credit limited to $1,500 for the total of all 2009 and 2010 purchases
Credit expanded to include certain asphalt roofs and stoves that burn biomass fuel
Definition of qualifying property revised, primarily to update energy efficiency requirements

29. Form 5695 page 2

30. Tax Law Updates for FS 2011 Basis of Inherited Property:
No automatic increase in basis to fair market value (FMV)
Inherited property treated as a gift
The Economic Growth and Tax Relief Reconciliation Act of 2001 repealed the estate tax for decedents dying after 12/21/2009 and before 1/1/2011. As a result the basis of asset inherited from decedents who died in 2010 is calculated differently. 30

31. Tax Law Updates for FS 2011 Basis of Inherited Property:
Basis of inherited property is lesser of decedent's basis or FMV
Executor may allocate limited basis increase to some property
Generally, for estate of decedents dying after 12/31/2009 and before 1/1/11 the basis of assists acquired for the decedents the lesser of the decedent's adjusted basis or the fair market value of the property on the date of the decedent’s death. However, there are some exceptions to the general rule. This change is only for the year the law providing for estate tax is scheduled to be reinstated on January 1, Determining the basis of property inherited from a descendent who died in 2010 can be very complex and should be refer to a tax professional. 31

32. Tax Law Updates for FS 2011 Expiring Tax Benefits:
Economic Recovery Payments for SSA, VA and RRB
Special Credit for Certain Government Retirees

33. Tax Law Updates for FS 2011 Expiring Tax Benefits (continued):
Increased Standard Deduction for Real Estate taxes or net disaster loss
Unemployment Compensation Payments
Some taxpayers who purchased a qualified motor vehicle after February 16, 2009 and before January 1, 2010 did not have to pay their new motor vehicle taxes until In these instances they may be eligible to deduct the amount on their 2010 income tax return
The mailing of 80,000 letters to customers who illegally collected UI benefits and did not respond to requests to pay back the money collected.  New York State now has the authority to garnish the federal income tax returns for those customer who haven’t attempted to repay.  A copy of the letter is attached. 
It is important that all One Stop staff are made aware of this change.  Customers have and will continue to ask questions about this process.  One Stop staff should advise customers that they can request additional information by calling the Department’s Benefit Overpayment Section at
If One Stop staff have any questions, they can HRD mailbox at WDTD Employment &

34. Tax Law Updates for FS 2011 Expiring Tax Benefits (continued):
Sales Tax for Purchase of New Vehicle
Deduction for educator expenses in figuring AGI

35. Tax Law Updates for FS 2011 Expiring Tax Benefits (continued):
Itemized deduction for state and local general sales taxes
Tuition and Fees deduction in figuring AGI

36. Tax Law Updates for FS 2011 Refund Option – Savings Bonds:
Purchase Savings Bonds without a bank account
Refund balance in paper check
Form 8888, Allocation of Refund (including Bond Purchases)
In addition to he three direct deposits, taxpayers can now use their refund to request up to three US series I saving Bonds registrations and receive a paper check for the balance of the refund. Taxpayers can make bond purchases for themselves, add beneficiaries or co-owners, and make bond purchases for someone other than themselves. Use Form 8888, Allocation of Refund (including Bond Purchases), to request these refund options.

37. Tax Law Updates for FS 2011
In-Scope Changes:
Schedule C, Profit or Loss from Business (Sole Proprietorship)
Same as Schedule C-EZ
Expenses up to $10,000
The limited Schedule C has the same criteria as Schedule C-EZ, except the expense limit will be up to $10,000 from $5,000.
The business Income lesson in the trainnig material will be expeanded to include more specific information about business expenses and recordkeeping. Intermediate Level 37

38. Tax Law Updates for FS 2011 In-Scope Changes:
Schedule K-1 (Form 1041, Form 1065 or Form 1120S)
Royalty income added
For tax year 2009 , interest, dividends, capital gains/loss, and tax-exempt interest topics from Schedule K-1s were included in the scope of the VITA/TCE program. Schedule K-1, Royalty income is being added to scope for filing season 2011 – advanced level 38

39. Tax Law Updates for FS 2011 In-Scope Changes:
Form 5329, Additional Taxes on Qualified Plans(Including IRAs) and Other Tax-Favored Accounts – Part 1
Exceptions to additional tax on early distribution
Part 1 of the form provides exceptions to the additional tax on early distribution from qualified pension plans or IRAs. Including this section in scope will allow volunteers to assist taxpayers who may have received an early distribution and spent the funds on items such as college tuition or qualified medical expenses. Intermediate level 39

40. Tax Law Updates for FS 2011 In-Scope Changes:
Cancellation of Debt (COD) – Debit Cards
Health Savings Accounts (HSAs) 40

41. Intake/Interview & Quality Review Sheets
Tax Law Updates for FS 2011
Form C
Intake/Interview & Quality Review Sheets
A must for preparers! 41

42. Tax Law Updates for FS 2011 QUESTIONS???? QUESTIONS??? QUESTIONS?????42