Tuesday, December 2, 2008, AM | 3 Comments
Remember back in October, congress passed the bail-out bill of $700 billion. Inside the bill, there were some tax provisions that would affect us all, the average American taxpayers.
“In all the publicity surrounding the bailout package, not much attention was paid to the tax policy items,” says Steve Forrest of Forrest Financial Services. “That’s one of the first things people should be aware of.”
Here are some of the primary provisions that could help you save on your taxes:
- The Alternative Minimum Tax (AMT)
The Alternative Minimum Tax (AMT), intended initially to ensure that people with high incomes could not avoid taxes, was again “patched” to prevent it from catching more middle-income taxpayers.
The patch increases the amounts you can exempt from your taxable income in calculating your 2008 AMT to
- $69,950 for married couples filing jointly
- $46,200 for singles and heads of households
- $34,975 for married couples filing separately
This higher exemption amount may help you to avoid the AMT, enabling you to take advantage of deductions that the AMT disallows.
- IRA directly to qualifying charities
Also extended through 2009 is a rule that allows a person over age 70½ to contribute up to $100,000 from an IRA directly to qualifying charities. The law uses the term “qualified charitable distribution” to describe an IRA charitable rollover. You do not have to itemize the contribution. Individuals may exclude the amount distributed directly to an eligible charity from their gross income.
- Deduct state and local sales tax
Another provision that may affect a large number of taxpayers is the extension for 2008 and 2009 of an option to deduct state and local sales tax instead of state and local income tax.
So if you live in a state with little or no income tax – such as New Hampshire – and you were already planning to buy a big ticket item, such as a car, you might want to do it while the sales tax deduction option is in force.
- Energy efficiency
If you were thinking about installing energy efficient windows and doors or adding insulation, you might want to wait until 2009. A popular tax credit of up to $500 for adding those items (and some others) was reinstated for next year, but not for 2008.
- Deduction for teachers
A deduction was extended for 2008 and 2009 for teachers who spend up to $250 out of their own pockets for classroom supplies.
- Home solar energy and fuel cell systems
The tax credit of up to $2,000 for home solar energy and fuel cell systems was already available in 2008, but Congress expanded the credit to include wind turbines.
The tax information contained herein
- is general in nature
- is provided for informational purposes only
- should not be construed as legal or tax advice
As always, if you want to be on a path of financial success:Facebook.com/doable.finance