Earlier this month, the President signed into law the Emergency Economic Stabilization Act of 2008. The bailout of the financial markets is a major components of the new law, but the new law also includes over 100 tax provisions!
HOW THE NEW TAX LAW IMPACT:
Here are some points that will help you determine how your taxes are affected:
– Mortgage Forgiveness Debt Relief Act of 2007 extended
This law forgiveness mortgage, enacted in late 2007, was originally set to expire at the end of 2009. The new law extends through 2012. The law excludes from tax all or part income derived from debt forgiveness on a principal residence result of foreclosure, mortgage training, short sale or deed in lieu of foreclosure.
– AMT patch
The AMT patch is intended to insulate middle-income taxpayers from AMT. The patch is only effective for 2008. Since the patch is currently only effective in 2008, is even more important to consider the impact of fiscal strategy now global.
The patch allows that the dependent care credit and education credits to be taken of the AMT liability. Before this fix, these credits could not reduce the AMT obligation.
The new law also provides some relief to those subject to AMT or have minimum tax credits from the exercise of options incentive measures.
– Improvement of Child Tax Credit
The new law reduces the minimum level of income earned by the refundable portion credit is calculated. The end result is a larger portion of the credit is refundable.
– Research Tax Credit Extended
The new Act extends the research tax credit to amounts paid or incurred in 2008 and 2009. The new law also increases the credit percentage from 12% to 14%.
– Leasehold and Restaurant Improvements
Rating restaurant improvements and leasehold improvements are eligible for depreciation over 15 years to 39 years for two years until 2009. In addition, some improvements in the retail space are eligible for 15 years of depreciation.
– State and Local Sales Tax Deduction Extended
The previous law allowed individuals to deduct state and local general sales taxes instead of state and local tax revenue. This expired in late 2007. The new law allows the deduction retroactive for 2008 and continues the deduction until 2009.
– Tax-free distributions from IRA charity
The new law allows taxpayers to make tax-free distributions of up to $ 100,000 from their IRAs for charitable purposes. This provision of Maturity 1 January 2008, but the new law extends through 2009.
– Additional Standard Deduction for Real Property Taxes Extended
Also extended through 2009 is the amount of the additional standard deduction allowed for real property taxes from taxpayers who did not not elaborate.
– Deduction for Higher Education Enrollment Extended
The higher above the line of education tuition deduction extends to 2009. The maximum deduction is $ 4,000 for taxpayers with adjusted gross income less than $ 65,000 ($ 130,000 for joint filers) and $ 2,000 for taxpayers with adjusted gross income between $ 65,000 and $ 80,000 (between $ 130,000 and $ 160,000 for joint filers).
This is what we can do now to ensure they are maximizing their tax advantages:
– End of fiscal planning
While minimizing your taxes is a activity throughout the year, the time to do planning for fiscal year end is approaching. Be sure to ask your CPA how you can benefit from the new law taxes.
EEP100 – Lecture 27
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