|
|
Where the Help you need is just one click away. Find the most frequently asked for tax information and low cost federal income tax preparation. |
|||||
|
Hybrid Car Credit IRA Deduction Maine Tax Forms Mass Tax Forms Michigan Tax Forms NY State Tax Forms Ohio State Forms Oregon State Forms Other State Forms Pensions and Annuities Real Estate Sale Rebate in 2008
|
|
|
Special Events Telephone Credit Retirement Savings-Credit Social Security Tax Tax Preparation Tax Rate Schedules 2010 More . . 
2008 IRS PublicationsInstructions 1040Pub 4128 - Tax Impact of Job Loss Mailing Instructions for Refunds Sample Depreciation Report |
New Credits for 2008
|
| Tax Year 2008 Information Center |
|---|
Tax break available to couples with $65,100 or less in taxable income and singles with $32,550 or less. Those who sell securities held more than a year are exempt from capital gains tax in 2008 throught 2010. The freebie - even better than the 5 percent tax such filers paid last year - seems tailor - made for retirees with lower incomes who have stocks and bonds to sell. But beware - "Only gains within the income limits qualify for zero tax."
Here's how it works. Say you're single and (after deductions and personal exemptions) have $22,000 in ordinary income such as from wages and interest. You'd pay no tax on up to $10,550 in capital gains. But gains that push taxable income over $32,550 would be taxed at 15 percent. Return to Table of Contents.
Taxpayers who had a foreclosure, deed-in-lieu of sale, mortgage loan modifciation or a short-sale may qualify for the Mortgage Forgiveness Debt Relief Act which started in tax year 2007. In tax law, the amount of forgiven debt is typically treated as income and is taxed. But to help people who are affected by the mortgage crisis, Congress excluded homeowners whose mortgage debt was forgiven in years 2007, 2008 and 2009. Keep records of the foreclosure/sale, and statements of the amount that the bank wrote off.
The standard deductions are higher for 2008, for all taxpayers. The IRS increases this amount each year for inflation. The exact amount depends on your filing status, whether you're 65 or older, blind, or if an exemption can be claimed for you by another taxpayer. The standard deduction amounts for 2008 are:
- Single or Married filing separately- $5,450 (up $100)
- Head of household - $8,000 (up $150)
- Married filing jointly / qualifying widow(er)s - $10,900 (up $200)
Standard deduction increased by real estate taxes and net disaster losses. Your standard deduction is increased by:
- Certain state or local real estate taxes you paid, and
- A net disaster loss attributable to a federally declared disaster. See the 1040 Instructions for line 39c on page 34.
The exemption amount you can claim on your federal income taxes has increased to $3,500. Up another $100 from the following year. This deduction is also subject to a phase out limit which depends on your tax filing status. For tax year 2008, the tax exemption phase out begins at the following income levels:
- Single individuals - $156,400
- Married filing separately - $117,300
- Heads of Households - $195,500
- Married filing jointly or qualifying widow(er)s - $234,600
The standard mileage deduction rates for business use of your vehicle in tax year 2008 have increased. The cost of maintaining a car as well as the cost of gasoline reflects this increase. The following are the standard mileage deduction rates for tax year 2008:
Business miles: 50.5 cents per mile (48.5 in 2007)
Charitable Services: 14.0 cents per mile (Unchanged)
Medical Travel: 19.0 cents per mile (20 cents in 2007)
Moving Travel: 19.0 cents per mile (20 cents in 2007)
The maximum Hope credit, available for the first two years of post-secondary education, is $1,800, up from $1,650 in 2007.
The income limit for the savers credit is $53,000 for joint filers (up $1,000), $39,750 for heads of household (up $750) and $26,500 for singles and married persons filing separately (up $500). Low-and moderate income workers who contribute to a retirement plan, such as an IRA or 401(k), may qualify for the credit, which is available in addition to any other tax savings that apply. Return to Table of Contents.
Participants in most Employer-Sponsored 401(k) plans and 403(b) plans for employees of public schools and certain tax-exempt organizations can contribute up to $15,500, unchanged from 2007. Individuals, age 50 or over, can make an additional contribution of up to $5,000, also unchanged from 2008.
Individuals participating in SIMPLE retirement plans can contribute $10,500, unchanged from 2007.� Those, age 50 or over, can make an additional contribution of up to $2,500, also unchanged from 2007.
The annual contribution limit for most Defined Contribution Plans rises to $46,000, up from $45,000 in 2007.
|
We are looking forward to meeting with you this up coming Tax Season. We reopen for business on January 23, 2010. Again, we will be meeting with our old and new clients at the Manlius Library. This year we will be at the Library on a need to be there basis only. |
Manlius Library |
File Just One, Consider It Done!
To reduce burden for certain small business taxpayers, the IRS has changed their employment tax filing requirement from quarterly to annually. If you have been filing Forms 941 and believe your yearly employment taxes will be $1,000 or less in this calendar year (average annual wages of $4,000 or less), and have not received notification of your eligibility by mail by mid-February, please call us by April 1st on (800) 829-4933, and select option 2. If we hear from you by April 1, we may be able to change your filing requirement to Form 944, Employer's Annual Federal Tax Return, rather than Form 941, Employer�s Quarterly Federal Tax Return. If you contact us after April 1, you will remain a Form 941 filer for this calendar year. If you are starting a new business you should contact as soon as possible to determine if you are eligible.
Here are some frequently asked questions and answers about the Form 944 program:
When will I file Form 944?
This return will be due once a year, on January 31, after the end of the tax year. Return to Table of Contents.
Qualified electric vehicle credit. You cannot claim this credit for any vehicle you placed in service after 2006.
Premiums that you pay or accrue for "qualified mortgage insurance" during 2007 in connection with home acquisition debt on your qualified home are deductible as home mortgage interest. The deduction is only if you took out a new mortgage or refinanced in 2007. The amount you can deduct is reduced by 10% (.10) for every $1,000 ($500 if your filing status is married filing separately) by which your adjusted gross income exceeds $100,000 ($50,000 if your filing status is married filing separately). It is phased out completely if your adjusted gross income is more than $109,000 ($54,500 if married filing separately).
Don't confuse this with homeowner's insurance to protect against fire or theft. Instead, this is insurance that protects a lender againist financial loss if a homeowner defaults on mortgage payments and the house has to be sold at foreclosure.
Schedule A (Form 1040) You can deduct mortgage insurance premiums you paid or accrued during 2007 on Line 13 of the 2007 Schedule A 1040.
AMT exemption amount decreased. The AMT exemption amount has decreased to $33,750 for single ( 45,000 for married filing joint or qualifing widow(er); 22,500 for married filing separately). Return to Table of Contents.
Basic Eligibility Requirements - You have, or your family has, at least $3,000 in qualifying income from, or in combination with, Social Security benefits, certain Veterans Affairs benefits, Railroad Retirement benefits and earned income. Supplemental Security Income (SSI) does not count as qualifying income for the stimulus payment. If you qualify you need to file a 2007 Federal Tax Return to receive your rebate.
Taxpayers whose adjusted gross income is under $75,000 ($150,000 married filing joint) will receive the full rebates. Rebates for those earning over $75,000 ($150,000 couples) will be gradually phased out.
To find out the amount of your expected Rebate for 2008, use the Economic Stimulus Payment Calculator on the IRS web site. If you did not receive the amount that you expected because of unreported income you can file an Amended Return, 1040X. Please allow 8 to 12 weeks for your rebate to arrive.
1) Credit for federal telephone excise tax paid. For tax year 2006 Only.
If you paid the federal excise tax on your long distance or bundled telephone service, you may be able to request a credit. This is a one time refundable credit for tax year 2006. See line 71 on form 1040. (Thanks Bob)
2) Credit for residential energy improvements. Credit for amounts paid in 2006 to have qualified energy saving items installed in connection with your home. (See line 52 of form 1040)
3) Elective salary deferrals. The maximum amount you can defer under all retirement plans is generally limited to $15,000 ($10,000 if you only have SIMPLE plans; $18,000 for section 403(b) plans if you qualify for the 15 -year rule).
4) Alternative motor vehicles. You may be able to take a credit if you place an alternative motor vehicle (including a qualified hybrid vehicle) or alternative fuel vehicle refueling property in service in 2006. (See forms 8910 and 8911)
5) State and local general sales taxes. This itemized deduction was set to expire. This deduction was extended late in December for 2006, but the extension was made after the tax forms were printed. If you are claiming state and local general sales taxes instead of state and local income taxes you will have to write ST on this line to indicate you are claiming sales tax.
Changes for New York State taxpayers.
1) New Empire State child credit -(see Form IT-213). A new refundable credit is available to full-year New York State residents. The credit is equal to 33% of the federal child tax credits for each child who qualifies for the federal child tax credit and is at least four years old; or the sum of $100 for each child who qualifies for the federal child tax credit and is at least four years old, whichever amount is greater.
2) Noncustodial parent New York State earned income credit (EIC) - see Form IT-209. A new noncustodial parent New York State earned income credit may be available to a full-year resident individual who has attained the age of 18, is a parent of a minor child who do not reside with the individual, has an order requiring the individual to make child support payments that are payable through a support collection unit, and has paid an amount of child support due during the tax year for every order that requires the individual to make support payments.
3) New home heating system credit (see Form IT-240)- must be an Energy Star label.
4) Clean heating fuel credit (see Form IT-241) new credit for the purchase of bioheat that is used for space heating or hot water production for residential purposes. 5) Alternative fuels credit vehicle - (see form IT-253) Credit for investing in a Hybrid Vehicle.
Return to Contents.
What you can count on for 2005.
1) Donors of used cars can forget about deducting their full blue book value. They can deduct what the charity nets from the sale of the car.
Return to Top.
If you placed an alternative motor vehicle or alternative fuel vehicle refueling property in service in 2006 you may be able to take a credit. See forms 8910 and 8911. The amount of the credit depends on the make and model. The credit is subtracted directly from the total amount of federal tax owed. Here is the list of qualify 2006 and 2007 hybrid models and the credit amount:
WASHINGTON - The Internal Revenue Service has acknowledged the certification by General Motors Corp. that five of its Model Year 2008 vehicles meet the requirements of the Alternative Motor Vehicle Credit as qualified hybrid motor vehicles.
The credit amount for the certified 2008 model year hybrid vehicles are:Original purchasers of these vehicles may claim the full amount of the allowable credit up to the end of the first calendar quarter after the quarter in which the manufacturer records its sale of the 60,000th vehicle. For the second and third calendar quarters after the quarter in which the 60,000th vehicle is sold, taxpayers may claim 50 percent of the credit. For the fourth and fifth calendar quarters, taxpayers may claim 25 percent of the credit. No credit is allowed after the fifth quarter.
- Chevrolet Tahoe Hybrid 2008 (2WD and 4WD)$2,200.00
- GMC Yukon Hybrid 2008 (2WD and 4WD)$2,200.00
- Saturn Vue Green Line 2008 $1,550.00
Return to Contents.
If you were billed after Fedruary 28, 2003, and before August 1, 2006, for the federal telephone excise tax on long distance or bundled service, you may be able to request a credit for the tax paid. You had bundled service if your local and long distance service was provided under a plan that does not separetely state the charge for local service.
You can request the standard amount or the actual amount you paid. The standard amount depends on the number of exemptions you claimed. If the number of exemptions you claimed is 1 then the standard amount is $30, (2 exemptions is $40), (3 exemptions is $50) and (4 or more is $60). This amount is entered on line 71, form 1040.
In all cases the most you can claim is $60 unless you claim the actual amount. To claim the actual amount you need to complete form 8913 and add up the tax as it appears on your phone bills from Feb. 28, 2003 to July 31, 2006 and claim that for a credit.
The reason for this credit is that the federal excise tax has been a charge on your phone bill for years. The excise tax was assessed based on how far and how long the call was. When phone companies began to offer flat fee phone service, challenges to the excise tax ended up in federal courts in several districts of the country. The argument was that flat fee/rate phone service had nothing to do with the distance and the length of the phone call. Therefore, the excise tax should not be assessed.
Last of all this is a refundable credit. No matter how your tax return works out you get the money. If you get a refund, you get a larger refund. If you owe tax the credit reduces the amount you owe. If your not required to file a return you should file to get the credit. This is a one time credit for 2006 only.
If you (or your dependent) paid qualified expenses in 2009 for yourself, your spouse or your dependent to attend an eligible educational institution, you may be able to take an education credit. See Form 8863 for details. However, you cannot take an education credit if any of the following apply.
The maximum Hope credit, available for the first two years of post-secondary education, is $1,800.
Return to Top.
One benefit of efile is that your refund will arrive in as little as 11 days. Some disadvantages of using efile software from
commercial or online providers is that you could be sending some very personal information to tax software providers who in turn could be selling or
sharing this information to credit card companys or others. We have used these programs and they want you to go online to update their program.
Some of the forms that require updating are very simple ones, like 1040-ES, that haven't changed at all over the years. Which I find suspicious.
They also ask for your address and last of all your credit card number to pay for Free Efiling. Then they send the money back to you! After you get
your refund, the end result is "Free". In our current business climate Secure really doesn't have meaning any more.
We are registered with the IRS to offer Efile. If we find a propram that IRS has developed to Efile, we may be able to offer this service to our clients. That is if and when the IRS develops a program of their own for efiling. Find out if you are eligible for Free Efile . This IRS site lists Efile providers who will efile individual returns for Free. Tax Act is listed with the IRS as a Free Efile provider.
The child tax credit for tax year 2009 is $1000 for each qualifying child who is under age 17 at the end of 2009. To claim this credit the child must be claimed as a dependent. The credit is limited or eliminated if your modified adjusted gross income is above a threshold amount for your filing status. The phase out for filing status single is $75,000 and married filing joint is $110,000. To figure out the exact credit you must complete the 'Child Tax Credit Worksheet". If you have three or more qualifing children, you may be able to qualify for an additional child tax credit by filing Form 8812.
Return to Table of Contents.In tax year 2008 you, and your spouse if filing jointly, maybe able to deduct up to $5000 ($6000 if age 50 or older at the end of the tax year). Up $1000 from 2007. If you were covered by a retirement plan in 2008, you maybe able to take an IRA deduction if your modified AGI is less than $63,000 ($105,000 if married filing jointly or qualifying widow(er)).
If you were age 70 1/2 or older at the end of 2008, you cannot deduct any contributions made to your traditional IRA or treat them as nondeductible contributions.
| Tax Year | Single or Head of household and your modifed AGI is less than: | Married filing joint or Qualifing widow(er) and your modifed AGI is less than: | IRA Deduction Allowed (under age 50) |
| 2008 | $ 63,000 | $ 105,000 | $ 5,000 |
| 2007 | $ 62,000 | $ 103,000 | $ 4,000 |
| 2006 | $ 60,000 | $ 85,000 | $ 4,000 |
| 2005 | $ 60,000 | $ 80,000 | $ 4,000 |
| 2004 | $ 55,000 | $ 75,000 | $ 3,000 |
For contributions made in 2008 to a traditional IRA, the deduction phase-out range for an individual covered by a retirement plan at work begins at
income of $53,000 for a single person or head of household (up from $52,000)and $85,000 for joint filers (up from $83,000).
For tax year 2008 the contribution amount allowed for Roth IRAs begins to phase out for joint filers with incomes exceeding $159,000 (up from $156,000) and $101,000 (up from $99,000) for singles and heads of household. Contributions made to a Roth IRA are non-deductible.
Return to Contents.
|
Who qualifies for the earned income credit? There are a number of factors that determine whether you qualify. The key issues are:
Return to Top. |
Earned Income Credit for 2008If your income is less than $38,646 ($41,646 if married filing joint) and you have a dependent child or if your income is below $15,880 and you do not have a dependent you may be able to claim this credit. The qualifying child must have lived with you in the US for more than 6 months in 2008. You must file a joint return if married to claim this credit. If you lived apart from your spouse for the last half of the year, you may be able to claim the credit as a head of household. You will be eligible to claim this credit if the following apply for year 2008:
For 2008 the maximum earned income tax credit for low and moderate income workers and working families with two or more children is $4,824,
up from $4,716. The income limit for the credit for joint return filers with two or more children is
$41,646, up from $39,783. |
Return to Contents.
If you received a distribution from your pension or annuity you should receive a Form 1099-R.
Your payments are fully taxable if either of the following applies.
For taxpayers that are self-employed, their Social Security tax is figured on Schedule SE. This amount is transferred to Form 1040, line 53. Any Social Security tax due is combined with any Federal tax due and paid with their 1040 tax return.
Repeal of the Estate Tax. If congress does not act this could be a very taxing year to die. Currently estates less than $1,000,000 are not subject to tax. That all changes in tax year 2010. Return to Contents.
| 10% | 15% | 25% | 28% | 33% | 35% | |
|---|---|---|---|---|---|---|
| Up to but not over - | Over | |||||
| Single | 0 - 7,825 | - 31,850 | - 77,100 | - 160,850 | - 349,700 | 349,700 - |
| Married Filing Joint | 0 - 15,650 | - 63,700 | - 128,500 | - 195,850 | - 349,700 | 349,700 - |
| Married Separate | 0 - 7,825 | - 31,850 | - 64,250 | - 97,925 | - 174,850 | 174,850 - |
| Head of Household | 0 - 11,200 | - 42,650 | - 110,100 | - 178,350 | - 349,700 | 349,700 - |
Recovery Rebate Credit
We are registered with the IRS to offer Efile. If we find a propram that IRS has developed to Efile, we may be able to offer this service to our clients. That is if and when the IRS develops a program of their own for efiling. Find out if you are eligible for Free Efile . This IRS site lists Efile providers who will efile individual returns for Free. Tax Act is listed with the IRS as a Free Efile provider.