2010 CCH. All Rights Reserved.
Gross Income Exclusions
and Deductions for AGI
Highlights of 2010 Tax Changes
ation adjustments increased the exclusion for foreign earned income to $91,500 in 2010 (up from
$91,400 in 2009).
The annual pay threshold for key employees increased to $160,000 in 2010 (same as in 2009).
In 2010, employees can exclude up to $13,170 they are reimbursed for quali
ed adoption costs under an
adoption assistance program at their work (up from $12,150 in 2009). In 2010, the exclusion begins to be
phased out when an employee’s AGI reaches $182,520 (up from $182,180 in 2009).
In 2010, employees can exclude up to $230 each month (same as in 2009) for employer-provided quali
parking and transportation.
The exclusion for interest income from Series EE and I government bonds when the proceeds are used
to pay for quali
ed education is phased out in 2010 when AGI exceeds $70,100 for unmarried taxpayers
($105,100 for MFJ). These in
ation-adjusted amounts were increased from the $69,950 and $104,900
thresholds that applied in 2009.
The maximum contribution amounts to a Roth IRA remained the same for 2010 as they were in 2009
($5,000 plus $1,000 for taxpayers age 50 and older). The AGI threshold where the amount of the maximum
contribution begins to be phased out stayed at $105,000 for unmarried taxpayers, but increased to $167,000
ling MFJ (up from $166,000 in 2009). The AGI threshold for phase-out for MFS taxpayers
remains at $0.
At the time the book went to press, the educators expense deduction and the tuition and fees deduction
had not been extended.
The maximum that taxpayers can contribute to individual coverage in a health savings account (HSA) for
2010 is $3,050. The maximum contribution for family coverage is $6,150. In 2010, a high-deductible health
plan for individual coverage is one that has at least a $1,200 deductible ($2,400 for family coverage).
The mileage deduction for moving is $.165 a mile in 2010 (down from $.24 a mile in 2009).
The maximum contribution amounts to a traditional IRA remained the same for 2010 as in 2009 ($5,000
plus $1,000 for taxpayers age 50 and older). The maximum contribution continues to be phased out
when AGI exceeds a certain threshold. In 2010, that threshold remains at $0 for MFS taxpayers who live
together at some point during the year. It remained at $89,000 for taxpayers
ling MFJ when the spouse
participates in an employer-sponsored retirement plan at work. The 2010 AGI thresholds for all other
taxpayers increased to:
$56,000 for unmarried taxpayers and taxpayers
ling MFS who did not live together during the year
(up from $55,000 in 2009).
$167,000 for a nonparticipating spouse who
les a joint return with a spouse who participates in a plan
at work (up from $166,000 in 2009).
Starting in 2010, taxpayers can rollover amounts from their traditional IRAs into a Roth IRA. When done
properly, no penalty will result. However, any earnings and deductible contributions would be included
in gross income. In 2010, taxpayers can either spread the taxable amounts over 2011 and 2012 (½ in each
year), or elect to tax the full amount in 2010.