Representing a sweeping overhaul of the U.S. health care system, the Patient Protection and Affordable Care Act was signed into law by President Barack Obama on March 23, 2010. The Health Care and Education Reconciliation Act of 2010 was passed by the House of Representatives on March 21, 2010 and on March 25, 2010 passed the by Senate. Here is a brief summary of the main tax provisions affecting individuals and businesses:
Health Care Reform Act – For Businesses
Health Care Reform Act – For Individuals
The President also recently signed into law the “Hiring Incentives to Restore Employment Act of 2010” (i.e. HIRE Act). Here is a brief summary of the provisions:
Hiring Incentives to Restore Employment Act of 2010
Home sweet homebuyer credit
The Worker, Homeownership and Business Assistance Act of 2009 (WHBAA) extended the first-time homebuyer credit to April 30, 2010 — June 30 for homes purchased pursuant to a contract signed by April 30. The credit is $8,000 ($4,000 for married filing separately) or 10% of the purchase price, whichever is less. The act also offers a modified credit up to $6,500 ($3,250 for married filing separately) for many current homeowners.
The WHBAA also increased the income limitations: Now, the credit is phased out beginning at modified adjusted gross income of $125,000 ($225,000 for joint filers).
If you’re considering a home purchase and would qualify for the credit, you may want to make every effort to find a home and have a contract in place by April 30 so you can take advantage of this valuable tax savings. Additional rules and limits apply, however, so consult your tax advisor first.
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Don’t lose out on rental real estate losses
If a person owns rental properties, there’s a good chance at least one of them is generating a loss. But the passive activity loss (PAL) rules can make it difficult to deduct those losses. If rental real estate is a significant activity, it pays to review the situation to determine whether one meets the IRS’s definition of “real estate professional.” This article explains some of the circumstances in which one may qualify and how it might be possible to convert passive losses into nonpassive losses, creating substantial tax benefits.
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Home is where the tax savings are
When buying a home, the first financial consideration many people think of are the income tax benefits. But there are other important tax-saving opportunities that should be considered. This article explores one strategy — which is buying a home jointly with a family member — and how it can remove the home’s value from one’s taxable estate.
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When can you write off bad business debts?
The tax deduction for business bad debts is among the most widely misunderstood provisions in the tax code. Many business owners mistakenly believe that one can take a bad debt deduction any time an account receivable or other obligation becomes uncollectible. This article reviews the circumstances under which it’s possible to write off bad debts.
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Tax Tips
In this issue’s “Tax Tips,” we briefly look at the 2009 extension of the net operating loss carryback period; an essentially 100% tax-free IRA; and an update on possible estate tax legislation.
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