2010 Tax Changes

6a0133f3fc5805970b0148c703d97a970c-320wiEach year brings changes in the tax laws that affect family child care providers. Here are the most important changes for 2010. For details, see my 2010 Family Child Care Tax Workbook and Organizer.

* The standard meal allowance rate for 2010 is: “$1.19 breakfast, $2.21 lunch/supper and $.66 snack. The rate for 2011 is the same except that the lunch/supper rate will be $2.22.

* The standard mileage rate is 50 cents per business mile (51 cents for 2011).

* The first year additional depreciation deduction was extended for 2010. It allows providers to deduct half the regular amount of depreciation in 2010 for eligible new items purchased in 2010.

* The record keeping rules for using cell phone in a business have been relaxed. Providers can use their Time percent to determine their business use deduction.

* Child care providers can deduct health insurance premiums as a business expense if they are not eligible to purchase health insurance through an employer. This new rules applies to 2010 only.

* If you hired an unemployed worker in 2010 you may be eligible for a payroll tax holiday that reduces the amount of employer Social Security taxes owed. If you did not take advantage of this tax holiday you can amend your tax return.

* Retirement plan contribution limits for 2010: Regular or Roth IRA $5,000 (plus $1,000 if age 50 or older); SIMPLE IRA $11,500 (plus $3,500 if age 50 or older); SEP IRA 18.58% of profit.

* Saver’s Tax Credit eligibility limits: $55,500 married filing jointly ($56,500 for 2011); $17,750 single ($18,250 for 2011).

* Energy tax credits: 30% of eligible expenses up to a maximum $1,500 credit. Child care providers with a Time-Space percentage of above 20% must reduce their credit deduction.

If you have questions about any of these tax changes for 2010 or any other tax questions, contact me at tomcopeland@live.com

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Categories: Record Keeping & Taxes, Tax Return

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