We have been working with Tom Scharf at Walthall, Drake and Wallace for over 20 years, and he and the firm have always given us the best advice as business people, not just accountants.

This has been an invaluable asset to all the business ventures we have been involved in.

MICHAEL J. SHERWIN, Columbiana Boiler Co.

Filing Basics

Filing Status

You can file as single, married filing jointly, married filing separately, head of household or qualifying widow(er) surviving spouse.

If you are married and filing jointly, you can take advantage of a number of tax credits and benefits. Taxpayers who are single or married filing separately also are eligible for tax credits and benefits; however, they may be subject to additional qualification rules. Unmarried taxpayers may file as single or, if they qualify, head of household. If more than one filing status applies to you, choose the one that results in the lowest tax obligation.

Tax Rates

Tax rates for 2010 remain the same as 2009. The six tax brackets are 10%, 15%, 25%, 28%, 33% and 35%. Legislation enacted on Dec. 17, 2010, extends these tax rates to 2011 and 2012. What changes each year are the income levels for each tax bracket as determined by your filing status.

Exemptions

You may claim a personal exemption for yourself, your spouse and each of your dependents. A dependent child includes children born to your family, stepchildren, eligible foster children and adopted children. A dependent child also can include qualifying grandchildren, brothers, sisters, stepsiblings and children of siblings.

Each exemption reduces your taxable income by $3,650 in 2010. The full $3,650 deduction is available for each personal exemption regardless of income because there is no phaseout for 2010. Legislation enacted on Dec. 17, 2010, extends the no phaseout rule to 2011 and 2012.

Alternative Minimum Tax

In addition to the regular income tax, more and more taxpayers are finding themselves subject to the Alternative Minimum Tax (AMT). The AMT is designed to ensure equitable taxes are paid by higher-income taxpayers. Since the AMT is not indexed for inflation,
taxpayers are increasingly finding themselves affected by it,

Higher AMT exemption amounts originally expired at the end of 2009. However, legislation enacted on Dec, 17, 2010, includes an AMT patch for 2010. For 2010, the exemption amounts are $47,450 for single filers and heads of households, $72,450 for married taxpayers filing jointly or a qualifying widow(er), and $36,225 for married taxpayers filing separately.