Welcome to the first Bakken CPA & Associates inaugural blog! It’s early January and many of you are thinking about what you need to begin preparing for your tax returns. Here are some quick tips to know:
An Extra Day This Year
You have an extra day to file this year – until Monday, April 18 to file your 2010 tax returns and pay any tax due because Emancipation Day, a holiday observed in the District of Columbia, falls this year on Friday, April 15. By law, District of Columbia holidays impact tax deadlines in the same way that federal holidays do; therefore, all taxpayers will have three extra days to file this year. Taxpayers requesting an extension will have until Oct. 17 to file their 2010 tax returns.
Deductions and Personal Exemptions for High-Income Taxpayers
The amount of itemized deductions and personal exemptions you can take are normally phased out as your income rises. In 2010, however, those income limits have been repealed, and the recent tax relief act extends the repeal for two more years, through 2012.
Tax Credit for College Tuition
For 2010 through 2012, the Hope credit is replaced by a new credit. Now called the American Opportunity Tax Credit, it provides a credit of up to $2,500 per student per year for four years of college. It now also covers the cost of books, and begins to phase out at $80,000 of Adjusted Gross Income for single filers and $160,000 for joint filers. If the credit is more than your income tax liability, 40 percent of it is refundable. Also, the full credit is allowed against the Alternative Minimum Tax.
A taxpayer who claimed the first-time homebuyer credit for a home bought in 2008, generally must begin repaying the credit in 2010.
Stay tuned for my “10 steps to prep” for this year’s tax return process. Thanks for joining us!