As a result of various new federal income tax laws, regulations, and other guidance issued in 2009 and over the last few years, many important federal individual income tax law changes go into effect during 2010. These changes impact a wide variety of matters, including the alternative minimum tax, the recapture of the first-time homebuyer credit, and the rules governing casualty loss deductions.
1. Alternative minimum tax expanded to cover numerous additional taxpayers. To the chagrin of many taxpayers, the alternative minimum tax (“AMT”) exemption for 2010 has been reduced from $46,700 for single taxpayers ($70,950 for married filing joint and $35,475 for married filing separate) in 2009 to $33,750 for single taxpayers ($45,000 for married filing joint and $22,500 for married filing separate) in 2010. Absent Congressional action, the reduction in the exemption amount means that many more individual taxpayers will be subject to the AMT in 2010 than in prior years.
2. AGI-based personal exemption phaseout and itemized deduction reduction eliminated. During the
2010 taxable year, individual taxpayers with higher levels of adjusted gross income (“AGI”) will no
longer be subject to a phaseout of their personal exemption or a reduction in their itemized deductions. In 2009 and prior years, taxpayers with AGI in excess of certain threshold amounts were required to reduce the amount of their personal exemption and/or itemized deductions
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