Wednesday, January 7, 2009

News for 2008 Tax Filing

A few things from the IRS "Highlights of 2008 Tax Law Changes"

Taxpayers may qualify for the recovery rebate credit if they didn't get a payment in or had a child in 2008.

AMT Exemption increases for incomes from 46,2000 to 69,950

Expiring tax breaks have been renewed:

- deduction for state and local sales taxes
- educator expense deduction
- tuition nad fees deducion
- District of Columbia first-time homebuyer credit
- residential energy-efficient property credit

Standard Deduction Increases

- 10,900 for married couples filing jointly and qualifying widow/widowers
- 5,450 for singles and married individuals filing separately
- 8,000 for heads of household

Personal and dependecy exemption is up $1000 to $3500.

Earned income tax credits rise to $41,646 for people with two or more children
$36,995 for people with one child
$15,880 for those with no children.

One in six taxpayers claim the earned income tax credit. Individuals can get this credit even if they owe no tax and even if no tax is withheld from paychecks.

Five-percent tax rate on qualified dividends and capital gains is reduced to zero if your income is below a certain amount.

New this year, taxpayers can claim an additional standard deduction, based on state or local real-estate taxes paid in 2008.

First-time Homebuyer Credit
- is a credit of up to $75,000 that works much like a 15-year interest-free loan. It is available for homes bought 4/9/08 through 6/30/09. There are income limits and qualifying rules.

Standard mileage rates for business use of a car is 50.5 cents per mils from Jan 1 to June 30, 2008. For the rest of 2008 it goes up to 58.5.

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