Itemized deductions

Have you noticed itemized deduction items like mortgage interest, state and local income and property taxes, and charitable donations? By filing Form 1040, you can without difficulty write-off the full amounts on your itemized deductions. Good news is that: the current tax cut additional legislation cancelled the phase-outs for 2011 and 2012 as well.

For 2010, the highest adoption credit was increased to $13,170 (up from $12,150 in 2009). In addition, the credit was made 100% refundable for the 2010 tax year (previously, it was nonrefundable). This means that you will receive a check for any surplus adoption credit after your federal income tax bill has been condensed to zero. To claim the credit, fill out Form 8839 (Qualified Adoption Expenses), and enter the credit on line 71 of Form 1040.

Self-employed people can subtract their health insurance premiums on page 1 of Form 1040 (use line 29 for 2010). The deduction will help them to reduce their federal income tax bills. However, the self-employed have never been allowed to deduct those premiums while calculating their self-employment tax bills on Schedule SE. Good news is that for 2010 only, you will be able to deduct health insurance premiums. So those premiums will reduce both your income tax bill and your SE tax bill. Unfortunately, this break will not be accessible for 2011 and further unless Congress extends it.
In the majority of cases, only those who purchased homes in 2008 will be greatly affected. They will have to repay 1/15 of the credit with the 2010 Form 1040.

For 2008 and 2009, unmarried individuals who did not list could write off up to $500 of state and local real property taxes by claiming an increased standard deduction. Married, joint-filing couples can write off up to $1,000. The 2009 Stimulus Act created a temporary write-off for non-itemizers who paid state and local sales taxes on new vehicles purchased between 2/17/09 and 12/31/09. The write-off came in the form of an additional standard deduction allowance. Similarly, itemizers were allowed to claim an extra itemized deduction for such taxes. Both breaks failed at the end of 2009, and they were not reinstated for 2010.

June 29 2011 02:36 pm | W4 Assistance and W4 tax Form

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