Tax Savings

TAX SAVINGS

Federal Tax Rate Schedules

Tax rate schedules help you estimate your federal income tax. The tax tables are based on your expected filing status.

The actual amount of your income tax is figured on Form 1040, 1040A, or 1040EZ.

2010 Federal Tax Rate Schedules

Single

If taxable income is more than ...	But not more than ...	The tax is ...
$0	$8,375	10% of the amount over $0
$8,375	$34,000	$837.50 plus 15% of the amount over $8,375
$34,000	$82,400	$4,681.25 plus 25% of the amount over $34,000
$82,400	$171,850	$16,781.25 plus 28% of the amount over $82,400
$171,850	$373,650	$41,827.25 plus 33% of the amount over $171,850
$373,650	no limit	$108,421.25 plus 35% of the amount over $373,650

Married Filing Jointly or Qualifying Widow(er)

If taxable income is more than …	But not more than …	The tax is …
$0	$16,750	10% of the amount over $0
$16,750	$68,000	$1,675.00 plus 15% of the amount over $16,750
$68,000	$137,300	$9,362.50 plus 25% of the amount over $68,000
$137,300	$209,250	$26,687.50 plus 28% of the amount over $137,300
$209,250	$373,650	$46,833.50 plus 33% of the amount over $209,250
$373,650	no limit	$101,085.50 plus 35% of the amount over $373,650

Married Filing Separately

If taxable income is more than …	But not more than …	The tax is …
$0	$8,375	10% of the amount over $0
$8,375	$34,000	$837.50 plus 15% of the amount over $8,375
$34,000	$68,650	$4,681.25 plus 25% of the amount over $34,000
$68,650	$104,625	$13,343.75 plus 28% of the amount over $68,650
$104,625	$186,825	$23,416.75 plus 33% of the amount over $104,625
$186,825	no limit	$50,542.75 plus 35% of the amount over $186,825

Head of Household

If taxable income is more than …	But not more than …	The tax is …
$0	$11,950	10% of the amount over $0
$11,950	$45,550	$1,195 plus 15% of the amount over $11,950
$45,550	$117,650	$6,235 plus 25% of the amount over $45,550
$117,650	$190,550	$24,260 plus 28% of the amount over $117,650
$190,550	$373,650	$44,672 plus 33% of the amount over $190,550
$373,650	no limit	$105,095 plus 35% of the amount over $373,650

Individual Retirement Accounts ( IRA's)

An individual retirement arrangement, or IRA, is a personal savings plan which allows you to set aside money for retirement, while offering you tax advantages. You may be able to deduct some or all of your contributions to your IRA. You may also be eligible for a tax credit equal to a percentage of your contribution. Amounts in your IRA, including earnings, generally are not taxed until distributed to you. IRA's cannot be owned jointly. However, any amounts remaining in your IRA upon your death can be paid to your beneficiary or beneficiaries.

To contribute to a traditional IRA, you must be under age 70 1/2 at the end of the tax year. You, and/or your spouse if you file a joint return, must have taxable compensation, such as wages, salaries, commissions, tips, bonuses, or net income from self–employment. Taxable alimony and separate maintenance payments received by an individual are treated as compensation for IRA purposes.

Compensation does not include earnings and profits from property, such as rental income, interest and dividend income or any amount received as pension or annuity income, or as deferred compensation.

Please refer to IRS Publication 590, Individual Retirement Arrangements (IRAs), for information on the amounts you will be eligible to contribute to your IRA account.

You cannot claim an IRA deduction on Form 1040EZ, you must file 1040A or 1040.

The deadline for contributions to a traditional IRA for the year is the due date of your tax return, not including any extensions of time to file.

Amounts you withdraw from your IRA are fully or partially taxable in the year you withdraw them. If you made only deductible contributions, withdrawals are fully taxable. Use Form 8606 to figure the taxable portion of withdrawals.

Withdrawals made prior to age 59 1/2 may be subject to a 10% additional tax. You also may owe an excise tax if you do not begin to withdraw minimum distributions by April 1st of the year after you reach age 70 1/2.

First-Time Homebuyer Credit Expanded for 2009 & 2010

The American Recovery and Reinvestment Act of 2009 expanded the First-Time Homebuyers Credit in two significant ways for qualifying taxpayers who buy a home in 2009 or enter into a contract by April 30,2010 and close before September 30,2010. The credit no longer has to be repaid, and the maximum has been increased to $8,000, or $4,000 for married filing separately. Qualifying taxpayers can claim the credit either on their 2008, 2009 or 2010 tax returns. Form 5405, First-Time Homebuyer Credit, provides additional information on who can and cannot claim the credit, income limitations and repayment of the credit.

For taxpayers who purchased a home after April 8, 2008, and before Jan. 1, 2009, the old credit maximums still apply: $7,500, or $3,750 for individual filers. The credit for these 2008 purchases must be repaid in 15 equal installments over 15 years, beginning with the 2010 tax year.

Economic Recovery Payments - Non Taxable

Any economic recovery payment you receive during 2009 or 2010 is not taxable. These $250 payments are being made to most people who:

Receive social security benefits, supplemental security income (SSI), railroad retirement benefits, or veterans disability compensation or pension benefits, and
Live in a U.S. state, the District of Columbia, Puerto Rico, Guam, the U.S. Virgin Islands, American Samoa, or the Northern Mariana Islands.

If you are married and you and your spouse both meet these requirements, each of you may get a $250 payment.

If you are entitled to a payment, you will get it automatically. You do not need to apply for it.

Temporary Tax Deduction on Car Purchases

This benefit is actually an above-the-line deduction for the state sales taxes, local sales taxes, and excise taxes paid by a purchaser of a new vehicle. To qualify, a taxpayer must have purchased the vehicle for first use between February 17 and December 31, 2009. The vehicle must be either (1) a passenger vehicle, light truck, or motorcycle with a gross weight of no more than 8,500 pounds, or (2) a motor home. Deductible taxes can’t exceed the portion attributable to the first $49,500 of the price paid for any single vehicle. Phase-outs start for individuals with AGI greater than $125,000 ($250,000 for MFJ).

For taxpayers taking the standard deduction, this credit should be claimed on Schedule L, Standard Deduction for Certain Filers. For itemizers, use Schedule A, Itemized Deductions.