2008 Tax Savings

Here is what new for 2008 tax deductions. I have had many people say they might not be able to travel or go on vacation this year because of the economy. I will continue to look for ways to keep you informed and help you save money so you can continue to do the things you love.

What's new for 2008 tax savings? Tax brackets, personal exemptions and standard deductions have been adjusted for inflation. Disaster victims will get more re-leaf and first time home buyers get some extra help.

Personal exemptions is $3,500 is up $100 from 2007. If you are in the 25% tax bracket you will save $25 dollars for each exemption claimed.

The standard deduction Singles get $100.00 increase to $5450. Married couples filing jointly get a rise to $10,900, which amount to $200 more than 2007. The standard deduction for Head of Household will increase to $150 to $8,000 and will give you 2008 tax savings.

The tax brackets have become broader: More of your income will be taxed at lower rates.

Tax Credit for first time home buyers, If you purchased a primary residence after April 8, 2008, and are a first time home buyer, you can qualify for a new tax credit equal up to 10% of up to $75,000 of the purchase price.

Additional Standard Deduction amount for property taxes paid. Non-itemizes who pay real estate taxes can claim even larger standard deductions. Single filer can add up to $500 of real estate tax payments. Joint filers can add up to $1,000 of property taxes paid.

Higher Income Limits for deductable IRA's and for Roth IRAs. If you have a retirement plan at work, you can take a full IRA deduction if your modified adjusted gross income is less than $85,000 if your married filing jointly or $53,000 if your single or head of household.

Tax Relief for victims of the floods in the Midwest. In the spring of 2008 floods in Arkansas, Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, and Wisonsin.

Itemizes can deduct all insured losses.

Victims can withdraw up to $100,000 from an IRA or company plan without penalty and pay tax on the payout over three years.

Anyone housing flood victims for 60 days or more gets a $500 exemption for each one with a maximum of $2,000.

The standard mileage rate for flood-related charitable driving is 36 cents per mile for driving done before July 1 and 41 cents per mile for driving done after June 30.

Refundable Child Tax Credit. The $12,050 income threshold needed to qualify to claim the child tax credit if it exceeds your regular income tax bill is lowered to $8,500 for.

Exemptions for the Alternative Minimum Tax. The AMT has been increased to $46,200 for single taxpayers and heads of household, $69,950 for married couples filing jointly and $34,975 for Married filing separately.

Income earned Abroad. The max foreign earned income exclusions has increased to $87,600 form $85,700.

Reduction in Capital Gains Tax Rates The maximum rate of 5% drops to 0% through 2010. However the 15% maximum tax rate on long term capital gains for taxpayers in the higher brackets remains the same.

Reduction in Dividend Tax Rates Taxpayers in the 10% or 15% tax brackets, the maximum rate of 5% drops to o% through 2010.

Kiddie Tax with more Bite. Thresholds have increase from $1,700 to $1,800 in 2008 and the age raised from 18 to 19. Full time students whose earned income is less than half their support, increrased to 24.

Educators Deduction. This deduction for up to $250 of classroom supplies purchased by educators was revived.

Nontaxable Combat Pay Allowed for Earned Income Credit. The election to include nontaxable combat pay in the calculation of earned income credit was extended to apply again for 2008 and 2009.

Tuition and Fees Deduction. The deduction for up to $4,000 of College Tuition and fees was reinstated by congess for 2008 and 2009.

State and Local Sales Tax Deductions. The opportunity for itemizers to choose to deduct their state sales tax payments instead of deducting state and local income taxes was reinstated.

I hope this has been helpfull and you are able to save on your 2008 taxes.

2008 Tax Savings

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