Get A Jump On 2010 Taxes
 By Terry M. Blair

Tax changes for 2010 abound. That means individuals and small-business owners should get an early start preparing for the April 15 deadline. Here are a few of the new regulations and deductions that could affect how you file your taxes and the amount of taxes you have to pay.

Health Care Tax Credit For 2010
If you help employees pay for their health care coverage, your business may qualify for the Small Business Health Care Tax Credit.

This credit is available to small employers who contribute an amount equal to at least half the cost of single coverage toward buying health insurance for their employees. The maximum credit for 2010 is 35 percent of premiums paid by eligible small-business employers.

Are you eligible for the credit? That depends on several factors.

The maximum credit goes to employers who pay annual average wages of $25,000 or less and have 10 or fewer full-time equivalent (FTE) employees. The credit is completely phased out for employers who have 25 FTEs or more, or who pay average wages of $50,000 per year or more.

Because the eligibility rules are based in part on the number of FTEs, if your business uses part-time help, you may qualify for the credit even if you employ more than 25 individuals.

To calculate your credit at tax time, use IRS Form 8941. You’ll include the amount of the credit as part of the general business credit on your income tax return. The IRS can help you determine if you qualify for the Small Business Health Care Tax Credit by following these Three Simple Steps.

Education Tax Credit
If you paid for college expenses in 2010, you might be able to take advantage of the American Opportunity Tax Credit.

This credit will help many parents offset the cost of sending their children to college. It’s part of the American Recovery and Reinvestment Act of 2009 and can be claimed by eligible taxpayers for college expenses paid in 2010. Here’s what you need to know.

This credit expands and renames the existing Hope Credit. It can be claimed for qualified tuition, books and related fees that you paid for higher education in 2010.

The credit is equal to 100 percent of the first $2,000 spent per student each year and 25 percent of the next $2,000. Therefore, the full $2,500 credit may be available to a taxpayer who pays $4,000 or more in qualifying expenses for an eligible student.

The full credit is generally available to eligible taxpayers who make less than $80,000 or $160,000 for married couples filing a joint return. The credit is gradually reduced for taxpayers with incomes above these levels.

To learn more about the American Opportunity Tax Credit, visit the IRS page American Opportunity Credit: Questions and Answers.

No More Paper Tax Packages
Business and individual taxpayers will no longer receive paper income tax packages in the mail from the IRS.

But, you still have to file your taxes.

One alternative is to use an online tax preparation software package. AFS Members receive a 15-percent discount on TurboTax Online, which lets you prepare your taxes for free and pay only when you’re ready to file. There’s no software to install, and you can file electronically for a faster refund. If you file before March 27, you can also take advantage of “Early Filer” pricing.

Other alternatives:

• Use a tax preparer
• Get the forms and instructions you need at IRS.gov
• Take advantage of IRS Free File, which provides options for free brand-name tax software or online forms plus free electronic filing. Free file should be available by late January.

(Posted January 2011)

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