Real Estate and Filing Your 1040 in 2010

Free From Broke bills itself as a “Personal Finance Blog for Regular Folks”. I was reading today’s post, Changes On The IRS Form 1040 This Year…How Does It Affect You, when the following three items jumped out at me:

1) Real estate tax deductions for filers who DON’T itemize their deductions are gone this year.

2) A “phase-out” rule for those who DO itemize deductions has been completely repealed for 2010 (and 2011 and 2012). This means itemized deductions such as mortgage interest and charitable donations no longer are being reduced as they have been for years.  Personal and dependent exemption deductions are also no longer being reduced as they have been.

3) For people who bought a home in 2008 (and a few in 2009), this is the year they must start paying the government back for their homebuyer tax credit. At that time, the credit was more like an interest-free loan.  So don’t panic if you bought your home in 2009 or 2010 — under most circumstances the money you received is yours to keep.

There was one other item that affects me since I’m self-employed: For 2010 only, self-employed people can deduct their health insurance premiums when calculating their self employment tax bills. Until now, the self employed were only able to deduct from their federal income tax bill — this year they can reduce both bills.

If you’re not familiar with Free From Broke, check it out – it’s one of my favorite blogs.

© 2011 Susan Pruden

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