2010 Sales Tax Holiday

Just in time for Back to School Shopping.....

Florida law directs that no sales tax or discretionary sales surtax will be collected on sales of books, clothing, footwear, and certain accessories selling for $50 or less, or on certain school supplies selling for $10 or less. This three-day tax exemption is in effect from 12:01 a.m., Friday, August 13, 2010, through midnight, Sunday, August 15, 2010.

The sales tax exemption applies to each eligible book or item of clothing selling for $50 or less and to each eligible school supply item selling for $10 or less. The exemption will still apply no matter how many items are sold on the same invoice to a customer as the limit is applicable on a per item basis.

Education Tax Break for 2009 & 2010

The American Recovery and Reinvestment Act (ARRA) allows for the American Opportunity Credit, to pay for college expenses.

The American Opportunity Credit modifies the existing Hope Credit for tax years 2009 and 2010, making the Hope Credit available to a broader range of taxpayers, including many with higher incomes and those who owe no tax. It also adds required course materials to the list of qualifying expenses and allows the credit to be claimed for four post-secondary education years instead of two. Many of those eligible will qualify for the maximum annual credit of $2,500 per student.

The full credit is available to individuals whose modified adjusted gross income is $80,000 or less, or $160,000 or less for married couples filing a joint return. The credit is phased out for taxpayers with incomes above these levels. These income limits are higher than under the existing Hope and Lifetime Learning Credits.

Haiti Earthquake Relief -Donate Now and Claim Deduction in 2009

People who contribute in 2010 to charities providing earthquake relief in Haiti can take a tax deduction for the contribution on their 2009 tax return instead of their 2010 return. This means you can receive an immediate tax benefit, rather than having to wait until you file next year’s return.

Note that only cash contributions made to these charities after Jan. 11, 2010, and before March 1, 2010, are eligible and the contributions must be made specifically for the relief of victims in areas affected by the Jan. 12 earthquake in Haiti.
You may deduct these contributions on either your 2009 or 2010 returns, but not both.

Source: www.irs.gov

AMT Exemption & Phase Out - 2009

AMT tax is a parallel tax that aims to tax the wealthy taxpayers who have lower regular tax liability due to preferential tax benefits.
To calculate AMT-
· Itemized deductions allowed under the AMT are mortgage interest used to buy, build or improve your home, charitable contributions, casualty losses, medical expenses in excess of 10% of adjusted gross income (AGI), the deduction for sales and excise taxes on qualified motor vehicle purchases after February 16, 2009, and miscellaneous itemized deductions not subject to the 2% of AGI floor.
· Personal Exemptions are not allowed but the AMT exemption is allowed.
· AMT Exemption that is allowed for 2009 from the AMTI income:
o Married Filing Jointly and Qualifying Widow(er): $70,950
o Single and Head of Household: $46,700
o Married Filing Separately: $35,475
· As with every exemptions there is phase-out rules for the AMT exemption. The phase-out range is based upon alternative minimum taxable income (AMTI). The AMTI phase-out ranges for 2009 are as follows:
o Married Filing Jointly and Qualifying Widow(er): $150,000 to $433,800
o Single and Head of Household: $112,500 to $299,300
o Married Filing Separately: $75,000 to $216,900
· Tentative AMT is calculated as 26% of the AMTI upto $175,000 and 28% on the balance.
· If the Tentative AMT is greater than the Regular tax liability than the difference is the AMT tax liability.