What's New for Next Tax Season?
The end of the tax year is over and there are already Christmas ads on TV so it can’t be that long until January is here and it's the next tax season. If you’re curious about what the new tax season may bring, continue reading. First we’ll talk about the old stuff that got extended.
Alternative Minimum Tax (AMT)
If you are worried about getting hit with Alternative Minimum Tax (but haven’t been hit yet) chances are good that you’ll get by again. With the “Bail-Out” bill, Congress included keeping the AMT hit down for one more year. To answer your questions on AMT, see "What is the Alternative Minimum Tax (AMT)?"
Also included with the “Bail-Out” bill, were “extenders” – continuing for one or two more years, certain deductions. If you deducted your sales tax instead of your state and local income tax on your 2007 tax return, you still can for 2008. Same goes for teachers with their $250 expense deduction and students with their tuition deduction.
IRA transfers to Charities
If you’re over 70 ½, you can still transfer IRA monies to a charity and not pay tax on those IRA dollars for 2008 and 2009.
Now let’s talk about the new stuff.
Deduct property taxes without itemizing
If you’re one of those lucky souls who has their home mortgage paid off, chances are you don’t have enough deductions to itemize. Good news for you! For the next 2 years, you can deduct your real estate property taxes even though you don’t itemize. Yep! You get to deduct it right along with your standard deduction. It is limited to $500 ($1,000 if you’re filing married joint.) For details, see “2008 Property Tax Deduction for Taxpayers who don’t itemize.” For details, see “2008 Property Tax Deduction for Taxpayers who don’t itemize.”
Buying /bought a new home recently?
If you’ve bought a home after April 8, 2008 or plan to buy prior to July 1, 2009, pay attention. You could get a “credit” on your tax return up to $7,500! But beware, it looks like a credit but it is a loan. Your “credit” must be paid back to the government over a 15 year period at $1500 per year. For more info, check out “Taking the First Time Homebuyer Credit.” For more info, check out “Taking the First Time Homebuyer Credit.”
Pay 0% on capital gains
Starting in 2008 and through 2010, if your regular income is taxed at the 10% or 15 % tax rates, you pay zero % on your long term capital gains sales. Yes, that’s right! Zero! If your filing status is single and your taxable income (Form 1040, line 43) is not more than $32,550, you get the zero tax rate on your long term gains. If your filing status is married filing joint, your taxable income can’t be more than $65,100. For head of house status, that income can’t be more than $43,650.
That’s it for today on what’s new for 2008. My next blog will talk about what’s new for business owners. Hope you all have a Happy Thanksgiving!