10 Tax Questions And Answers 2010

It's a good idea to read the ten tax questions and answers 2010. Sometimes reading about issues and questions others ask will prompt some people to realize the issue addressed is one for them as well. Tax laws change constantly and it is important to be aware of every new rule and modifications to existing rules. The following questions and answers refer to the 2010 tax year which should be filed in 2011.

1. Can I claim the homebuyer tax credit? I am not sure if I qualify. The tax credit applies only to places used a primary residence and is claimed using form 5405. Taxpayers who entered into a contract to buy a property on or before April 30, 2010 and close on the home by June 30, 2010 are eligible. Taxpayers can claim the credit on either their 2009 or their 2010 return. There are income limitations and in some cases residency requirements in order to qualify for the credit.
2. I received unemployment compensation in January and February, is part of that money tax free? Sorry, when you file your 2010 return, the unemployment compensation will be included as taxable income.
   
3. I purchased a new vehicle, will I be able to use the sales tax as a deduction even if I don't itemize? No, that option is not available in 2010. Sales tax can only be used as a deduction if the taxpayer itemizes in 2010.
4. I am a teacher, will I be able to use the educator's deduction? Unfortunately, that deduction has lapsed and will no longer be available unless Congress extends it.
5. I pay alimony. Is that tax deductible? Yes, alimony can be deductible on a tax return.
6. I owe money to the IRS, will I receive this year's refund? It's a possibility you may receive it. It's also a possibility that the IRS will hold your current year's refund and apply a credit to the amount that is owed.
7. I have a child who is eighteen and in college full-time, can I still claim her as a dependent? Yes, you can still claim her as a dependent.
8. Do I have to pay taxes on the bonus I received? Yes, in general, a bonus is taxable income that will be shown on a W-2 form and must be reported on a tax return.
9. I need to file an amendment for last year's taxes. Can I e-file it? No, all amendments must be printed out and sent to the IRS for processing by mail.
10. Can i deduct home improvements on my tax return? Generally, you cannot deduct them in the tax year they were incurred. Home improvements add to the value of your home and are added to the tax basis of the property.

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Homebuyer credit