Catherine E Thomas CPA - serving Oro Valley, Marana & NW Tucson

Tax Aspects of the HIRE Act of 2010
There are many changes as a result of the Health Care Act, which take effect in various years. For 2010 there is a credit for health insurance provided by small employers with less than 25 full time employees and whose average wages are $50,000 or less. The less pleasing tax items begin to take effect in 2011. Employers will be required to disclose the value of health care benefits on this year's W2 in preparation for the IRS identifying who does and does not have health insurance. Excise (penalty) taxes are assessed on those who are not fully covered starting in 2014. In 2013, medical expenses are not deductible on the Federal return unless they exceed 10% (taxpayers under age 65). For those over age 65, the threshold for deducting remains at 7.5%. In 2013, high income taxpayers will get hit with a higher FICA rate for wages exceeding threshold amounts and on investment income. There are other provisions but time will tell if these stand or possibly get modified by subsequent legislature.

Worker, Homeownership & Business Assistance Act of 2009
This new tax legislation was signed into law 11/6/2009. The main item of interest for individual taxpayers is extending the time period and eligibility for the first time homebuyer credit. The credit extends past the prior 11/30/2009 deadline to 05/01/2010. Also, if a taxpayer or spouse maintained a principal residence for 5 consecutive years during the 8 years immediately prior to the new home purchase, they qualify as a first time homebuyer and the credit. There are limits for purchase price of new home and there is a phase out if taxpayers adjusted gross income exceeds $125,000 individual, $225,000 married filing joint.

Tax tip: the law does not say the old home must be sold! A taxpayer could convert old home into a rental and and still qualify for this credit.

Mileage Rates for 2010
Standard mileage rate for business travel is 50 cents/mile. Medical and moving rates are 16.5 cents/mile. Keep those mileage logs up to take advantage of this deduction!