There are several important changes that the IRS wants you to keep in mind when you file your 2010 federal income tax return in 2011, the most common for individual income tax payers are listed below.

 

 

In 2010, eligible self-employed individuals can use the self-employed health insurance deduction to reduce their social security self-employment tax liability in addition to their income tax liability. As previously, eligible taxpayers claim this deduction on their 1040. But in 2010, eligible taxpayers can also enter this amount on Schedule SE Line 3, which will reduce net earnings from self-employment that is subject to the 15.3 percent social security self-employment tax.

 

Premiums paid for health insurance covering the taxpayer, spouse and dependents generally qualify for this deduction. Premiums paid for coverage of an adult child under age 27 at the end of the year, for the time period beginning on or after March 30, 2010, also qualify for this deduction, even if the child is not the taxpayer’s dependent.

 

As before, the insurance plan must be set up under the taxpayer’s business, and the taxpayer cannot be eligible to participate in an employer-sponsored health plan.

 

First-time Homebuyer Credit Expanded  

You must have bought — or entered into a binding contract to buy — a principal residence on or before April 30, 2010.  If you entered into a binding contract by April 30, 2010 you must have closed or gone to settlement on the home on or before Sept. 30, 2010.    Because of the specific documentation requirements for claiming the credit, taxpayers who claim the credit on their 2010 tax return must file a paper — not electronic — return and attach IRS Form 5405, and a properly executed copy of a settlement statement used to complete the purchase.

The bad news is that taxpayers who claimed the first-time homebuyer credit for a home bought in 2008 must generally begin repaying it on the 2010 return. Additionally, a repayment requirement also applies to a taxpayer who claimed the credit on either their 2008 or 2009 return and then sold it or stopped using the home as their main home in 2010. If this applies to you, IRS Form 5405 is generally used to report the repayment.

Finally, certain members of the armed forces and some other taxpayers still have time to buy a home and take the credit. See IRS Form 5405 instructions for details. 

Standard Mileage Rates 2010

The standard mileage rate for business use of a vehicle  is 50 cents for each mile driven. The rate for the cost of operating a vehicle for medical reasons or as part of a deductible move is 16.5 cents per mile. The rate for using a car to provide services to charitable organizations remains at 14 cents a mile.

• State and local general sales tax deduction
• Higher education tuition and fees deduction benefiting parents and students.
• Educator expense deduction for kindergarten through grade 12 educators with out-of-pocket classroom expenses of up to $250.
• District of Columbia first-time homebuyer credit.