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Five Items to Keep In Mind When Filing 2008 Taxes

Here are a few tax law changes you may want to note before filing your 2008 federal tax return:

1. Expiring Tax Breaks Renewed

The following popular tax breaks were renewed for tax-years 2008 and 2009:

  • Deduction for state and local sales taxes on Form 1040 Schedule A, Line 5 Educator expense deduction on Form 1040, Line 23 or Form 1040A, Line 16
  • Tuition and fees deduction on Form 8917 In addition, the residential energy-efficient property credit is extended through 2016.
  • In general, solar electric, solar water heating and fuel cell property qualify for this credit.
  • Starting in 2008, small wind energy and geothermal heat pump property also qualify.
2. Standard Deduction Increased for Most Taxpayers

The 2008 basic standard deductions all increased. They are:

  • $10,900 for married couples filing a joint return and qualifying widows and widowers
  • $5,450 for singles and married individuals filing separate returns
  • $8,000 for heads of household

Beginning this year, taxpayers can claim an additional standard deduction based on the state or local real-estate taxes paid in 2008. Also new for 2008, a taxpayer can increase his standard deduction by the net disaster losses suffered from a federally declared disaster.

3. Contribution Limits Rise for IRAs and Other Retirement Plans
This filing season, more people can make tax-deductible contributions to a traditional IRA. The deduction is phased out for singles and heads of household who are covered by a workplace retirement plan and have modified adjusted gross incomes between $53,000 and $63,000. For married couples filing jointly, the income phase-out range is $85,000 to $105,000.

4. Standard Mileage Rates Adjusted for 2008

The standard mileage rates for business use of a vehicle:
  • 50.5 cents per mile from Jan. 1 to June 30, 2008
  • 58.5 cents per mile driven during the rest of 2008
  • The standard mileage rates for the cost of operating a vehicle for medical reasons or a deductible move: 19 cents per mile Jan. 1 to June 30, 2008; and 27 cents from July 1 to Dec. 31, 2008.

    The standard mileage rate for using a car to provide services to charitable organizations remains at 14 cents a mile. Special rates apply to the Midwest disaster area.

      Note: Standard mileage rates for 2009 are; 55.0 cents for business travel, .14 cents for chartiable travel and .24 cents for moving travel.

    5. Kiddie Tax Revised

    The tax on a child's investment income previously only applied to children younger than age 18. It now applies if the child has investment income greater than $1,800 and is:

    • Younger than 18;
    • 18 years of age and had earned income that was equal to or less than half of his or her total support in 2008;
    • Older than 18 and younger than 24, a student and during 2008 had earned income that was equal to or less than half of his or her total support.

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