Mortgage Rate News

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It’s time to start thinking about tax time. And while you might be gathering documents and waiting for things like your mortgage interest statement, you should also be aware of some of the changes to tax law for 2010.

David over at My Two Dollars has a list of changes that might affect you. Included on this list are:

• The deduction for the purchase of a new car is disappearing on January 1. So you can still get your deduction for this year, but after 2010 starts, you won’t be able to get an itemized deduction.
• Roth IRA: For those who are converting a traditional IRA to a Roth IRA, there are no income limits. However, you may have taxes to pay on the earnings. So instead of paying next year, you can divided it up between 2011 and 2012.
• AMT exemption: The exemption will decrease to $45,000 for those married filing jointly. This totally stinks, as the AMT slowly hits the middle class harder and harder.
• Sales Tax: Sadly, you will no longer be able to itemize deductions for local and state sales taxes.
• Charitable donations from your IRA will not be excluded from your income going forward.
• Unemployment benefits, up to $2,400, are exempt from income taxes. This is a boon, since unemployment benefits are normally taxed as income. This will end in 2010.
• No more teacher deduction. It expires, but it could be reinstated.
• First-time home buyer tax credit as been expanded to the end of April, and expanded to include a $6,500 credit for those who are “trading up”.

So, depending on where you sit with taxes, the changes for 2010 could be great, or depressing. Some will find some things to cheer about, while others could find some counted on deductions are disappearing. There are a number of opportunities for those who look for them, and some great opportunities to plan ahead so that you maximize your tax situation next year. And, of course, it is always a good idea to consult with a tax professional to make sure everything is in order.