Remember, with TurboTax, we'll ask you simple questions about your life and help you fill out all the right tax forms. Unless Congress extends them by the end of 2010, when the ball drops on January 1st, most of them will be gone for good. Reviewing these expiring tax rules now can save you money come April 15. On January 1st, you’ll ring in more than a new year-you’ll ring in new tax rates, too. Higher tax brackets may be coming back.Īmerican taxpayers got a big break in 2001 when tax brackets on ordinary income were reduced.The list is long, but here’s one of the most important changes: Many of the Bush-era tax cuts from 20 are set to expire as well. So plan your health spending deductions wisely-fast-track your OTC purchases now before the rules change and change your 2011 contributions to eliminate OTC products. Come January 1st, FSAs can be used for OTC products only if you have a doctor’s note or prescription.
For the rest of 2010, you can use your tax-free medical account to purchase over-the-counter medications without restrictions. The rules on Flexible Spending Accounts (FSAs) are changing.
Other rules concerning this credit will also change.For example, the Additional Child Tax Credit (a refund you get if your total child tax credits exceed your tax liability) will have new eligibility rules. The credit will drop to $500 come January 1, 2011. In 2010, you can take a credit of $1,000 per child under 17 years of age.
The Child Tax Credit is a major benefit for working families and single parents. Starting in 2011, you can still take the credit on your tax return, but can’t get it in advance in your paycheck. On December 31st, say goodbye to the Advance Earned Income Tax Credit, which enables low-income workers to receive a portion of their earned income credit in advance in their regular paychecks.
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The full credit is available to single filers making less than $80,000 and joint filers making under $160,000. The clock is ticking on the American Opportunity Tax Credit, a benefit that can help you offset the costs of college tuition and related expenses you pay in 2010.A credit of up to $2,500 is available if your expenses for the first four years of college are $4,000 or more. If you’ve been claiming the credit on your tax return, that benefit will expire as well. After December 31st, the $400 credit for single filers ($800 for joint filers) will expire and your paychecks will revert to the higher withholding rates. That’s because of reduced withholding linked to the Making Work Pay Credit. If you’re a W-2 wage earner, you’ve probably been getting slightly larger paychecks since 2009. So take one final look-there’s still time to take advantage of them. (Remember: The Bush tax cuts are still in effect for 2010 and these changes won’t impact your 2010 tax return.) If not renewed by Congress, they will be history come January 1st, 2011. This is the eleventh hour for many tax benefits included in the 2008 Economic Recovery Act as well as the 2001 Bush tax cuts. As 2010 draws to a close, so will many important tax credits and deductions.
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