Highlights

• Standard mileage rates Business can deduct 50 cents per mile driven on their 2010 tax return. The rate has been set for 2011 at 51 cents per mile. The rate for medical miles driven was 16.5 cents per mile for 2010 and 19 cents per mile for 2011, while charitable miles use the rate of 14 cents per mile for both years.
• AMT exemption Tax exemption for a married couple filing a joint return is $72,450, and $47,450 for single filers. The AMT has also been determined for 2011: $74,450 for a joint return and $48,450 for single return.
• Self-employed health insurance deduction for 2010 only, those premiums are a deduction reducing net earnings from self-employment and the related self-employment tax. This can be up to a 15.3 percent savings on the cost of health insurance.
• Increase in start-up expense deduction current deductible amount of new business start-up expenses was increased to $10,000 from $5,000. Any additional amounts must be expensed over not less than 180 months.
• Maximum Section 179 deduction increased from $250,000 to $500,000. At the same time, the limit for the phase-out of the deduction was increased to $2 million from $800,000.

Tax Changes for Individuals

Affordable Care Act Tax Provisions Health coverage legislation enacted this year includes a small business health care tax credit to help them and small tax-exempt organizations afford the cost of covering their workers. Child-Related Tax Changes Information on adoption benefits, child's investment income, the definition of a qualifying child, and additional child tax credit. COBRA Premium Assistance IR 2010-52 and Continuation Extension Act of 1020 (HR 4851) made changes to the COBRA premium assistance provisions. Decrease in Personal Casualty and Theft Loss Limit General rule for personal casualty or theft loss for 2010. Deduction for New Motor Vehicle Taxes You can deduct state or local sales or excise taxes (or certain other taxes or fees in a state without a sales tax) in 2010 for the purchase of any new motor vehicle(s) after February 16, 2009, and before January 1, 2010. Earned Income Credit (EIC) The earned income credit amounts have increased for 2010. Economic Recovery Payment Information on economic recovery payments. Education-Related Tax Changes Information on education savings bond exclusion; Hope, American opportunity, and lifetime learning credits; and qualified tuition programs. Health/Medical-Related Tax Changes Information on Archer Medical Savings Accounts (MSAs), Health Savings Accounts(HSAs), and long-term care premiums. Income Averaging for Farmers and Fisherman Averaging farming and fishing income. Information on settlements from Exxon Valdez litigation. Increase in Limit on Long-Term Care and Accelerated Death Benefits Exclusion New limits on exclusion payments made under a long-term care insurance contract. Increased Standard Deduction The increased standard deduction for certain filers. Information on Home/Residence-Related Tax Changes Information on home/residence-related tax changes Itemized Deductions The limit on itemized deductions expired in 2010. Personal Exemption Amount The amount you can deduct for each personal exemption for 2010 is the same as the amount you could deduct for 2009. Qualified Transportation Fringe Benefits Changes to the monthly exclusion for commuter highway vehicle transportation and transit passes and reimbursement for reasonable expenses of qualified bicycle commuting. Residential Energy Credits Information on residential energy credits. Social Security and Medicare Taxes The maximum amount of wages subject to the social security tax and Medicare tax remains unchanged from 2010. Special Limitation Period for Retroactively Excluding Military Retirement Pay If you retire from the armed services based on years of service and are later given a retroactive service-connected disability rating by the VA, your retirement pay for the retroactive period is excluded from income up to the amount of VA disability benefits you would have been entitled to receive. Standard Mileage Rate The standard mileage rates for business use and medical- or move-related use of your vehicle nave decreased for 2010. The standard rate for charitable use remains the same. Wage Threshold for Household Employees The social security and Medicare wage threshold for household employees is...

Tax Changes for Businesses

5-Year Carryback of Applicable Net Operating Losses (NOLs) and Losses From Operations 3, 4, or 5-year carryback period for an applicable NOL or loss from operations expired for 2010. Affordable Care Act Tax Provisions Health coverage legislation enacted this year includes a small business health care tax credit to help them and small tax-exempt organizations afford the cost of covering their workers. Alcohol and Cellulosic Biofuel Fuels Credit There are several changes to alcohol and cellulosic biofuel fuels credits. Alternative Fuel Vehicle Refueling Property Credit The credit has increased for certain property placed in service in 2009 and 2010. Alternative Motor Vehicle Credit The credit is allowed against the AMT, covers certain plug-in electric drive motor vehicle conversions, and has expired for certain heavy hybrids. Biodiesel and Renewable Diesel Fuels Credit There are several changes to the biodiesel and renewable diesel fuels credit. Build America Bonds Find out what a build America bond is and how to claim a credit. Cancellation of Debt Certain businesses can make an irrevocable election to delay recognition income from the cancellation of business debt arising from the reacquisition of certain types of business debt repurchased in 2009 or 2010. Carbon Dioxide Sequestration Credit There are several changes to the carbon dioxide sequestration credit. COBRA Premium Assistance Credit The American Recovery and Reinvestment Act of 2009 (ARRA) allows a credit against employment taxes for providing COBRA premium assistance to assistance eligible individuals. Credit for Employer Differential Wage Payments Eligible small business employers may be able to claim a credit for differential wage payments. Depletion There is a change to the taxable income limitation on percentage depletion for 2009. Depreciation and Section 179 Expense The depreciation limit on certain business vehicles has been changed. Domestic Production Activities Deduction For tax years beginning after 2009, the percentage used to figure the domestic production activities deduction increases to 9%. Election to Accelerate Certain Credits in Lieu of the Special Depreciation Allowance Corporations and a certain automotive partnership can elect to accelerate certain credits. Health Savings Accounts (HSAs) Information on changes for Health Savings Accounts (HSAs). Investment Credit There are several changes to the investment credit. Maximum Automobile Value for Using the Cents-Per-Mile Valuation Rule An employer providing a passenger automobile for personal use by an employee may use special rules for determining the value of the personal use. Original Issue Discount (OID)Tables Contains latest version of OID tables. Prior year tables are also available. Partial Exclusion Increased for Gain From Certain Small Business Stock Exclusion of gain from the sale of qualifying small business stock is increased. Penalty for Late Filing of a Partnership Return The late filing penalty has changed for certain late filed partnership returns. Penalty for Late Filing of an S Corporation Return The late filing penalty has increased for certain late filed S corporation returns. Plug-in Electric Drive Motor Vehicle Credit A credit is available for certain new plug-in electric vehicles with at least four wheels you place in service in tax years beginning after 2008. Plug-in Electric Vehicle Credit A credit is available for certain new two- or three-wheeled or low-speed plug-in vehicles acquired after February 17, 2009. S Corporation Built-in Gains Tax No tax is imposed on certain S corporation net recognized built-in gains. Self-Employment Tax The maximum amount of net earnings from self-employment that is subject to self-employment tax remains $106,800. Social Security and Medicare Taxes The maximum amount of wages subject to the social security tax and Medicare tax remains unchanged from 2010. Standard Mileage Rate The standard mileage rates for business use and medical- or move-related use of your vehicle nave decreased for 2010. The standard rate for charitable use remains the same. Work Opportunity Credit A targeted group employee now includes certain unemployed veterans and disconnected youth.

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