2008 Tax Changes That Are Noteworthy

If you're still completing your 2007 taxes, here are some last minute deductions you might want to consider:

2007 Tax Deductions

• Mortgage Forgiveness: If on or after January 1, 2007, you had a percentage of your mortgage loan on a primary residence forgiven (as part of a loan restructuring, short sale, or foreclosure) you do not have to declare the first $2 million of forgiven debt as income.
• Alternative Minimum Tax Exemptions: For 2007, the US congress raised the AMT increase to $66,250 for a married couple ($44,350 for singles).  This is a one-year increase.
• IRA Contributions: You have until April 15th to add money to your traditional or Roth IRA.  For 2007, you can contribute up to $4,000 (or $5,000 if you're over 50).
• Mortgage Insurance Premiums: If you bought a new mortgage insurance policy on a first or second home in 2007 (either through a purchase or refinance) and have income below $100,000 (for a married couple), you can deduct premiums for 2007. 
• Dependent Care Expenses: If you pay someone to care for a child under 13 years old, your spouse, or other dependent so that you can work or look for work, these payments are deductible.

Recent Tax Changes For 2008

• The standard mileage deduction for business increases to 50.5 cents per mile.
• You can contribute $5,000 to your IRA ($6,000 if you're over 50) - up $1,000 over 2007.
• The provision permitting taxpayers to deduct state sales taxes expired at the end of 2007.
• Married taxpayers with joint income of up to $85,000 will be able to deduct IRA contributions if they file jointly.
• If you're one of the two-thirds of taxpayers who don't itemize on their taxes, you'll be able to deduct $10,900 as a married couple filing jointly.
• Joint filers who have taxable income under $65,000 and single filers with income below $32,550 don't have to pay any tax on capital gains they realize in 2008.
• Taxpayers who lose a spouse now have up to two eyars after that death to take the maximum exclusion of $500,000 in gain on the sale of a principal residence.
• The maximum amount of earning subject to Social Security tax increases to $102,000 in 2008
  
  
  
  Disclosure: Please consult a tax advisor for all tax matters.  Data from April 2008, REALTOR Magazine.