2010 Tax Law Changes
The following table
provides some important federal tax information for 2010, compared with
2009. Many of the dollar amounts are unchanged or have changed only
slightly due to low inflation. Other amounts are changing due to
legislation.
| Social
Security/ Medicare |
2010
|
2009
|
| Social
Security Tax Wage Base |
$106,800 |
$106,800 |
| Medicare Tax Wage Base |
No limit |
No limit |
| Individual
Retirement Accounts |
2010
|
2009
|
| Roth IRA Individual, up
to 100% of earned income |
$
5,000 |
$ 5,000 |
Traditional IRA
Individual,
up to 100% of earned Income |
$
5,000 |
$ 5,000 |
| Roth and traditional IRA
additional annual "catch-up" contributions for account owners age 50
and older |
$
1,000 |
$ 1,000 |
| Qualified
Plan Limits |
2010
|
2009
|
| Defined Contribution
Plan Dollar limit on additions on Sections 415(c)(1)(A) |
$ 49,000 |
$ 49,000 |
| Defined Benefit Plan
limit on benefits (Section
415(b)(1)(A)) |
$195,000 |
$195,000 |
| Maximum compensation
used to determine contributions |
$245,000 |
$245,000 |
| 401(k), SARSEP, 403(b)
Deferrals (Section 402(g)),
& 457 deferrals (Section
457(b)(2)) |
$ 16,500 |
$ 16,500 |
| 401(k), 403(b), 457
& SARSEP additional "catch-up" contributions for employees age
50 and older |
$
5,500 |
$
5,500 |
| SIMPLE deferrals (Section
408(p)(2)(A))
|
$ 11,500 |
$ 11,500 |
| SIMPLE additional
"catch-up"
contributions for employees age 50 and older |
$
2,500 |
$
2,500 |
| Compensation defining
highly compensated employee (Section
414(q)(1)(B))
|
$110,000 |
$110,000 |
| Compensation defining
key employee (officer) |
$160,000 |
$160,000 |
| Compensation triggering
Simplified Employee Pension contribution requirement (Section
408(k)(2)(c))
|
$
550 |
$
550 |
| Driving
Deductions |
2010
|
2009
|
| Business mileage, per mile |
50
cents |
55
cents |
| Charitable mileage, per
mile |
14
cents |
14
cents |
| Medical and moving, per
mile |
16.5
cents |
24
cents |
| Business
Equipment |
2010
|
2009
|
| Maximum Section 179
deduction |
$134,000
* |
$250,000
* |
| Phaseout for Section 179 |
$530,000 |
$800,000 |
| Transportation
Fringe Benefit Exclusion |
2010
|
2009
|
| Monthly
commuter highway vehicle and transit pass |
$
230 |
$
230 |
| Monthly qualified parking |
$
230 |
$
230 |
| Domestic
Production Activities Deduction |
2010
|
2009
|
| Percent of qualifying
business net income |
9
percent (6% for oil and gas companies) |
6
percent |
| Standard
Deduction |
2010
|
2009
|
|
Married filing jointly
|
$
11,400 |
$
11,400 |
|
Single (and married filing separately)
|
$
5,700 |
$
5,700 |
|
Heads of Household
|
$
8,400 |
$
8,350 |
| Personal
Exemption |
2010
|
2009
|
| Amount |
$ 3,650
|
$ 3,650 |
|
Domestic Employees
|
2010
|
2009
|
|
Threshold when a domestic
employer must
withhold and pay FICA for babysitters, house cleaners, etc.
|
$
1,700 |
$
1,700 |
|
Kiddie Tax
|
2010
|
2009
|
| Net unearned income not
subject to the "Kiddie Tax" |
$
1,900 |
$ 1,900 |
| Estate
Tax |
2010
|
2009
|
| Federal Estate Tax
Exemption |
repealed
**
|
$3.5
million |
| Annual Gift
Exclusion |
2010
|
2009
|
| Amount
you can give each recipient |
$13,000 |
$
13,000 |
| IRS Interest
Rates |
2010
(1st
quarter)
|
2009
(4th quarter)
|
| Tax
overpayments |
4
percent
(3
percent for corporations; 1.5 percent for the part of corporate
overpayments exceeding $10,000) |
4
percent
(3
percent for corporations; 1.5 percent for the part of corporate
overpayments exceeding $10,000) |
| Tax
underpayments |
4
percent
(6
percent for large corporate underpayments) |
4
percent
(6
percent for large corporate underpayments) |
* A stimulus law provided
much larger
Section 179 depreciation deductions for 2009. For 2010, however, the
maximum deduction will revert back to a lower amount unless Congress
takes further action.
** Under
a 2001 law, the estate tax exemption was gradually increased and the
tax rate levied on estates decreased. For one year only in 2010, the
estate tax is repealed. However, several members of Congress
have said they will work to put the estate tax back in place,
retroactive to January 1, at 2009 rates ($3.5 million exemption/45
percent tax rate).
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