Tax Changes

2008 Tax Changes for Individual Taxpayers
2007 Tax Changes for Individual Taxpayers
2006 Tax Changes for Individual Taxpayers

2008 Tax Changes for Individuals

Standard Mileage Rates
For Year 2008
— 50.5 cents per mile for business miles driven
— 19.0 cents per mile for medical reasons
— 19.0 cents per mile for moving expenses
— 14.0 cents per mile for charitable service

The new rate for medical and moving purposes compares to 20 cents in 2007, reducing by 1 cent.


2007 Tax Changes for Individuals

Alternative Minimum Tax
[AMT exemption amount increased per AMT Patch]
The AMT exemption amount has increased to $44,350 ($66,250 if married filing jointly or qualifying widow(er); $33,125 if married filing separately).

Restrictions on Charitable Contributions
[Cash Contributions]
All cash contributions made in tax years beginning after August 17, 2006, to any qualified charity must be supported by a dated bank record or a dated receipt.

Standard Mileage Rates
For Year 2007
— 48.5 cents per mile for business miles driven
— 20.0 cents per mile for medical reasons
— 20.0 cents per mile for moving expenses
— 14.0 cents per mile for charitable service

Qualified Electric Vehicle Credit Expired
You cannot claim this credit for any vehicle you placed in service after 2006.

Health Savings Accounts (HSAs)
[Maximum annual deductible]
$5,500 ($11,000 for family coverage).

[Deductible contribution limit increased]
$2,850 ($5,650 for family coverage) regardless of the amount of your health insurance deductible. The maximum additional deduction for individuals age 55 or older increases to $800.

Income Limits for Hope and Lifetime Learning Credits
For 2007, the amount of your Hope or lifetime learning credit is phased out (gradually reduced) if your modified adjusted gross income (MAGI) is between $47,000 and $57,000 ($94,000 and $114,000 if you file a joint return). You cannot claim an education credit if your MAGI is $57,000 or more ($114,000 or more if you file a joint return).




Tax Increase Prevention and Reconciliation Act of 2005
Here are highlights on the new Act signed by President Bush on May 17, 2006:

Alternative Minimum Tax (AMT) Relief
This is only for 2006; taxpayers will be able to take advantage of higher AMT exemption amounts.

Married filing jointly or qualifying widow(er)s — $62,550
Sinlge — $42,500
Married filing separately — $31,275

Also the Act extends through 2006 the provision allowing taxpayers to use non-refundable personal credits to offset AMT liability. Non-refundable personal credits include
— Dependent care credit
— Credit for the elderly and disabled
— Credit for interest on certain home mortgages
— Hope Credit
— Lifetime Learing Credit

Dividend and Capital Gains
The long-term capital gains rate will remian at 15% until December 31, 2010, for most taxpayers. For the taxpayers in 10% and 15% brackets, long-term capital gains tax will be 5% for 2006 and 2007, then 0% for 2008 through 2010. The dividends will receive the same tax treatment as capital gains through the end of 2010.

Small Business Expensing
Small businesses are currently allowed to expense up to $100,000 per year in qualifying property and equipments. This provision is extended through 2009.

Increase in Age Limit for "Kiddie Tax"
Effective immediately, the age limit is under 18, increased from under 14.

Conversion from Traditional IRA to Roth IRA
The Act eliminates the $100,000 AGI ceiling for converting a traditional IRA to a Roth IRA starting 2010. The conversion is a taxable distribution, but not subject to the 10% early distribution penalty.





2006 Tax Changes for Individuals

Exemption Amount Increased
The amount you can deduct for each exemption has increased from $3,200 in 2005 to $3,300 in 2006.

Standard Deduction Amount Increased
Head of household — $7,550
Married filing jointly or qualifying widow(er)s — $10,300
Married filing separately — $5,150
Single — $5,150

Six-Month Automatic Extensions
Starging January 1, 2006, the new regulations will allow not only corporations but also most noncorporate business taxpayers, including partnerships and trusts, to request an automatic six-month tax-filing extension. Accordingly, all eligible business taxpayers will use Form 7004 to request an automatic six-month extension of time to file.

Standard Mileage Rates
For Year 2006
— 44.5 cents per mile for business miles driven
— 18.0 cents per mile for medical reasons
— 18.0 cents per mile for moving expenses
— 14.0 cents per mile for charitable services
— 32.0 cents per mile for Huricane Katrina relief services

Restrictions on Charitable Contributions
[Cash Contributions]
All cash contributions made in tax years beginning after August 17, 2006, to any qualified charity must be supported by a dated bank record or a dated receipt. The tax year for most individual taxpayers begins on January 1 so that the restriction will be applied starting 2007 for most taxpayers.

[Non-cash Contributions: Clothing & Household Items]
Beginning with contributions made after August 17, 2006, no deduction is allowed for most contributions of clothing and household items unless the donated property is in good used condition or better.