"Death and taxes," says the IRS website, rather cheekily in fact. "You can try to fight them both tooth and nail, but at the end of it all, it's a losing proposition. Especially when it comes to taxes, the government is going to want its fair share cut of your salary and business profits one way or another, whether you like it or not. Rather than engage in tax evasion and possibly live the remaining years of your life on the run as a tax fugitive from the long arm of the Internal Revenue Service (IRS), you might as well confront the issue of taxes head on. All we can do is try our best to understand how income taxes work and take reasonable steps to minimize their effects on our financial lives as much as possible."
There are, however, few changes to the rates from 2009 to 2010. The IRS sites a sluggish economy for the lack of changes, but it's possible they all just decided to lull us into submission before hitting us hard next year. Below is a list of the major changes. This information is also available on the IRS website.
* Personal Exemption: No change, for the very first time ever. The standard exemption will stay at $3650.
* Standard Deduction: No change, with the exception of Head Of Household filers. Head of Household filers will see a slight increase by $50 - from $8,350 (2009) to $8,400 (2010).
* Overall Tax Bracket Thresholds: Will increase across the board for all tax filing statuses, although at a much lower rate than past tax year increases.
* Annual Gift Tax Exclusion Amount: No changes made.
* Traditional and Roth IRA Contribution Limits: No change. Despite the fact that IRA and Roth IRA contribution limits did not increase in 2009 in reply to strong inflationary pressure, there will nevertheless be no changes in the maximum contribution limits to individual retirement accounts for 2010. The standard IRA contribution limit for 2010 will stay at $5,000. The catch-up contribution limit for those 50 or older will stay at $6,000 as well.
Amazingly, the IRS allows for comments to be made on their site, and very few are happy about the 2010 release, even if it doesn't change much from last year.
"Where's the reward for being successful? Being solidly in the 25% bracket, we pay our fair share as productive citizens. Last year's filings were quite an eye opener from previous ones (and we know the reasons why). We live a moderately frugal life, and will definitely get more aggressive in maximizing what advantages still remain for small business owners," says one commenter.