Tax Breaks Likely to be Extended

Posted on: May 26th, 2010 by

CPA RockvilleMuch of the recent legislative action in Washington has been focused on health and financial reforms.  But another bill dealing with tax issues appears to be in the works as well.  It is expected to be enacted sometime in the next week.  The American Jobs and Closing Tax Loopholes Act will provide one year extensions to a number of tax rules that expired at the end of last year.  The extenders will be made retroactive to the beginning of 2010.  Some of the more notable extensions include:

Property Taxes – The additional standard deduction on real property taxes, $500 for individual filers and $1000 for couples, will be extended.  This is for use by people who don’t itemize their deductions.

Higher Education Deduction – Up to $4000 of qualified higher education tuition and related expenses could be taken as above-the-line deductions.  There are income limitations on who may take this deduction and it’s not available if the expenses are deductible under any other tax program.

Teacher Classroom Supplies Deduction – Up to $250 in out-of-pocket spending on qualifying classroom supplies may be taken as an above-the-line deduction.  On top of that, teachers who itemize their taxes may be able to deduct qualifying expenses that exceed $250 by classifying them as employment related miscellaneous itemized deductions.

Hybrid Vehicles – An alternative motor vehicle credit will continue to be available for hybrid vehicles.  Separate credits are available for cars and light trucks, and for medium and heavy trucks.

Energy Efficient Windows – The bill will modify the terms of the tax credits for energy efficient windows to reflect regional climate differences.

Disaster Relief – A number of programs will be extended to help taxpayers affected by federally declared disasters, including higher allowable loss limits for deductions and a five year carry-back provision for net operating losses.  This could prove to be very important with the hurricane season meteorologists are predicting.



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