Recovery Rebate Credit If you weren't eligible for an economic stimulus payment in 2008, you might still be able to get that money. The initial payments were based on your 2007 income, and if your income was too low or too high, you may have missed out. You can now use your 2008 income to collect, and the IRS is offering help in calculating whether you qualify.
The Alternative Minimum Tax (AMT) is a law that was created to make sure high income earners didn't get out of paying income taxes. Now this rule is affecting more middle-income taxpayers, but the "bailout bill" upped the exemption amount for 2008 to spare more taxpayers from the AMT for one more year. If you bought your first home between April 9, 2008 and June 30, 2009, you might qualify for a new credit. Taxpayers can get up to $7,500 from the federal government, which has to be paid back over 15 years at a rate of $500 per year. It amounts to an interest-free loan from Uncle Sam that can help you get your first house. Tax Relief for Midwest Disaster Areas If you lived in certain Midwest states that were affected by severe storms, tornadoes or flooding that happened between May 19 and August 1, 2008, you can receive special tax breaks. The rules include reduced restrictions on casualty loss deductions and charitable contribution deductions. There is also an exemption available if you provided housing to a victim of these disasters. Increased Contribution Limits for IRAs The tax rules permit taxpayers to contribute to traditional IRAs and Roth IRAs if their income falls within certain parameters. If your income is too high, you are limited in these contributions. All of the limits increased for 2008, which means taxpayers with higher income might still be able to contribute. Standard Mileage Rate Changed The standard mileage rate for business use of your vehicle was 50.5 cents per mile for the first six months of 2008, and 58.5 cents per mile for the rest of the year. The rates also changed for miles driven for medical reasons or charitable purposes. Capital Gains Taxes Lowered Those with lower incomes will benefit from a reduction in the lowest capital gains rate. The formerly 5% rate for married taxpayers with income under $65,100 and single taxpayers with income under $32,500 has now been reduced to 0%. Kiddie Tax Changes The rules related to investment income of children have changed to include students between ages 18 and 24 who are not financially reporting themselves. A child with investment income greater than $1,800 must be taxed at the parent's tax rate to avoid shifting of investments to children to escape income taxes. Required Minimum Distributions From IRAs Retirees with tax-deferred retirement funds such as 401(k)s and IRAs are required to take minimum amounts out of those funds once they reach age 70 ½ . The government requires this because those amounts taken out are taxable on withdrawal, and it ensures the IRS gets something from retirees. Because of the stock market troubles, RMDs are suspended for 2009. That doesn't help when preparing 2008 taxes, but is important to note for planning for 2009. Did you get an economic stimulus payment last year? That amount really was an advance credit against your 2008 return. The amount you received in 2008 could affect your 2009 credit claim. If you got less than the maximum amount, which for most employed taxpayers was $600 per single filer ($1,200 for married couples filing jointly), you might be able to claim the rest of it this filing season. All versions of the individual tax return (Forms 1040, 1040A and 1040EZ) have a new line to claim the Recover Rebate Credit. You'll need the statement you got from the IRS in connection with your payment. Consider Electronic Filing If you decide to use your computer to calculate your taxes, consider taking the next step and file the forms electronically. E-filed returns are processed in about half the time of paper ones, according to the IRS. Plus, e-filing catches math problems and provides confirmation your return has been received. You might even be able to e-file for free via the Free File Alliance, a joint venture of the tax software industry and the federal government. Last filing season, taxpayers with adjusted gross income of $54,000 or less were able to file at no cost via the IRS program. Use Direct Deposit Regardless of whether you file electronically or the old-fashioned paper way, this year have your refund check directly deposited into your bank account. Again this filing season, you can have your refund sent directly to up to three accounts. You'll just need to file Form 8888. Whether you have your tax cash deposited in one, two or three accounts, there's one big advantage: You won't have to worry about the check being lost in the mail or returned to the IRS because of a bad address. Even better, you'll have access to your refund sooner. Just be sure to put the correct routing and account numbers on the form. Don't Panic Tax filing makes everyone a little nervous, but when you start early, you've got time to get the answers and make sure you're taking full advantage of every tax break for which you're eligible. Check Bankrate's<http://www.bankrate.com/brm/news/news_taxes_home.asp>tax pages throughout the filing season for more tips, stories and explanations of tax laws and how to make the most of them. IYou also can visit the IRS Website <http://www.irs.gov/> or call its TeleTax service at (800) 829-4477 to get recorded information on more than 140 tax topics. <http://www.walletpop.com/taxes/10-new-tax-laws?photo=2> --~--~---------~--~----~------------~-------~--~----~ You received this message because you are subscribed to the Google Groups "WebTV Dawgs/Dittos" group. To post to this group, send email to [email protected] To unsubscribe from this group, send email to [email protected] For more options, visit this group at http://groups.google.com/group/WebTV-Pals -~----------~----~----~----~------~----~------~--~---
