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A handful of tax benefits expired in 2007. Among them are the telephone excise tax refund, qualified electric vehicle credit, and a number of Hurricane Katrina-related tax provisions, including the special personal exemption for housing Katrina victims, special mileage reimbursements for Katrina-related charity work, tax-favored treatment of qualified hurricane distributions and loans from retirement plans, special limits for education tax credits, and exclusion from income of discharge of nonbusiness debt. These provisions no longer apply.
Another credit, the residential property energy credit, is only available through 2007. This allows you to take a tax credit for 10 percent of the costs of having qualified energy saving items installed in your primary residence. The maximum credit is $500, but only $200 can be used on energy saving widows. In addition, there is another credit available for installing special solar or fuel-cell equipment.
Also just for 2007, the alternative minimum tax has special exemption rates that shield some additional 20 million taxpayers from falling victim to this special taxing scheme. This issue is revisited annually by Congress.
All the usual tax bracket, exemption and deduction amounts have been adjusted for inflation, allowing you to shield more money from taxation, lowering your bill:
- Personal exemption - $3,400 for 2007, $3,500 for 2008.
- Standard deductions - singles and marrieds filing separately, $5,350 in 2007 and $5,450 in 2008; heads of households, $7,850 in 2007 and $8,000 in 2008; married filing jointly, $10,700 in 2007 and $10,900 in 2008.
- Standard mileage rate - business use, 48.5 cents per mile in 2007 and 50.5 cents in 2008; charitable use, 14 cents per mile in 2007 and 2008; deductible medical or moving travel, 20 cents per mile in 2007 and 19 cents in 2008.
- Equipment expensing election - business expensing limit of $125,000 in 2007 and $128,000 in 2008.
- IRA deductions - $4,000 in 2007 and $5,000 in 2008; additional catch-up contributions of $1,000 for those age 50 or over.
The amounts you can set-aside in a qualified retirement plan will remain constant for 2007 and 2008. The maximum salary deferral to a 401(k), 403(b), 457 or simplified employee pension plan is $15,500, with additional catch-up contributions of up to $5,000 for those age 50 or older. Deferrals to a SIMPLE plan are limited to $10,500 with a catch-up of $2,500.
Stay tuned to CompleteTax for the latest information and changes regarding the 2007 tax filing season!
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Tax Guide 2008
Who Must File a Return?
Depending on your status and income threshold, you may or may not have to file an annual return. To avoid running afoul of the rules, please read Who Must File a Return?
Miscellaneous Forms of Income
Certain types of transactions may be considered "income" by the IRS, and thus fall under special rules for reporting and taxation. For more on this topic, please review Miscellaneous Forms of Income.
Standard and Itemized Deductions
There are many different types of deductions you may be able to use to lower your tax bill. But the rules for each deduction are unique. For more on this subject, please review Standard and Itemized Deductions.
Estimated Tax Payments
These payments are used to pay tax on income that is not subject to withholding, and they are due quarterly, or penalties will apply. To learn more about the requirements for these payments, please read Estimated Tax Payments.
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Tax News
Tax Round-Up: A Look Ahead to Changes in 2008
Not much was accomplished in Congress in 2007, but there are a number of tax law changes that will go into effect in 2008. For further details, please read Tax Round-Up: A Look Ahead to Changes in 2008.
Congress Agrees To AMT Tax Relief at Last-Minute, Before Its Recess
Congress saves its holiday recess and provides tax relief to 20 million middle-class taxpayers, but the measure comes too late for the IRS, which must delay the start of income tax filing season to adjust to the changes. To find out more, please read Congress Agrees To AMT Tax Relief at Last-Minute, Before Its Recess.
New Mortgage Debt Relief Plan Becomes Law
Homeowners and lenders who unwisely made deals tied to unaffordable homes and mortgages will now get some tax and debt relief, thanks to a sympathetic federal government. For more information on this important topic, please read New Mortgage Debt Relief Plan Becomes Law.
House Lawmakers Mull Ways to Tax Rising E-Commerce
States dependent on sales taxes have seen their revenues decline because of tax-free online shopping. Now Congress is stepping in to help them develop a uniform plan to reverse this trend and begin collections. For further details, please read House Lawmakers Mull Ways to Tax Rising E-Commerce.
Tax News Archive
For more stories and features on federal, state and payroll tax issues and how they may affect you, read the listing of articles in the archive.
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