2010 CCH. All Rights Reserved.
Tax Determination, Payments,
and Reporting Procedures
Highlights of 2010 Tax Changes
Two types of residential energy credits are available for 2010. The
residential energy property credit
allows taxpayers a credit equal to 30% of the cost of qualifying improvements (like adding insulation,
and installing energy ef
cient exterior windows and heating and air conditioning systems). A maximum
credit of $1,500 is allowed for 2009 and 2010 combined. The
residential energy ef
allows a tax credit equal to 30% of the cost of the qualifying equipment (like solar hot water heaters
and wind turbines). Unlike the residential energy property credit, there is no limit on the amount of the
residential energy ef
cient property credit.
In 2010, the child tax credit is refundable up to 15% of earned income in excess of $3,000 (same as in 2009).
ation-adjusted AGI levels for the retirement savings contribution credit are included in the chapter.
Three types of vehicle purchases may qualify for a nonrefundable tax credit in 2010. One is for individuals
and businesses that buy a new hybrid vehicle with a gross vehicle weight rating (GVWR) of 8,500 pounds or
less. The amount of the credit varies based on a number of factors, one of which is the car’s fuel economy. A
second credit is for the purchase of a new quali
ed plug-in electric drive vehicle. The amount of this credit
ranges from $2,500 to $7,500, depending on the battery capacity. A third credit is available to taxpayers that
buy a plug-in electric conversion kit. The amount of the credit is 10% of the cost of converting a vehicle to a
ed plug-in electric drive motor vehicle. The maximum credit is $4,000. Taxpayers are allowed to claim
this credit even if they claimed a hybrid vehicle credit for the same vehicle in an earlier year.
There are two refundable homebuyer credits available in 2010. One is for
rst-time homebuyers; the second is
for repeat (long-time resident) homebuyers. Both credits are available for binding sales contracts entered into
by April 30, 2010 and completed by September 30, 2010. The credit applies to purchases of the taxpayer’s
main home from someone other than the taxpayer’s spouse, ancestor, descendent. Also, persons claimed as a
dependent or under the age of 18 cannot take the credit. “First-time homebuyers” are persons who have not
had an ownership interest in a home for the three years prior to the purchase date. For married taxpayers to
qualify for the credit, both spouses must be
rst-time homebuyers. The initial amount of the credit is 10% of
the purchase price, with a maximum credit of $8,000 ($4,000 if MFS). Repeat homebuyers are “long-time
who have owned and lived in the same home for
ve consecutive years in the eight years prior
to the purchase. For married taxpayers, both spouses must qualify as long-time residents to claim the credit.