2007 & 2008 TAX UPDATES
- Retirement and Savings
- Education Tax Breaks
- Teacher Tax Break
- IRS e-File
- Where is My Refund
- 2007-2008 Tax Updates
NEW TAX SAVING OPPORTUNITY FOR OHIO HOMEOWNER WHO IS 65 YEARS OR OLDER!
Anyone who is 65 years or older can now claim "homestead exemption" regardless of your income. Please check the link below for further information.....
http://tax.ohio.gov/divisions/communications/homestead_exemption_information.stm
Retirement and Savings
| * | 401(k) / 403(b) / 457 Plan Contributions New tax legislation allows employees to now contribute up to $15,000 to their employer's qualified retirement plan. The amount is $20,000 if you will be age 50 or older at year end. |
| * | Saver's Credit Qualified individuals may now be eligible for the "Saver's Credit" of up to $1,000. This credit is in addition to the benefit you receive from the income deferral for contributing to a Roth IRA, 457 plan,SEP, 401(k) or a 403(b). This nonrefundable credit is targeted at lower income individual and gradually is totally phased out. |
| * | IRA Contributions The contribution limit for the Traditional IRA and Roth IRA has been increased to $4,000. Workers 50 or older can contribute $5,000. Additionally, the phase out limits for the deductible IRA has been increased enabling more people to deduct their contribution if they choose the Traditional IRA. |
| * | Self-Employed Retirement Plans Self-employed workers will be able to contribute more into their Keough and Simplified Employee Pension (SEP) beginning in 2005. The contribution limit for defined contribution plans increases to $40,000. |
Educational Tax Breaks
The Economic Growth and Tax Relief Reconciliation Act of 2001 increased the number of tax breaks available to college students. You should become familiar with the various tax deductions and credits and plan accordingly to maximize the benefits. If you prefer, let ZOOMTAX prepare your tax return and we will help obtain the tax benefits you deserve from your higher education expenses.
| * | Higher Education Expense Deduction A maximum deduction of $4,000 can be deducted for Adjusted Gross Income by eligible taxpayers in 2007. Married taxpayers must file a joint income tax return to claim this deduction. If you take the higher education deduction you may not claim the Hope or Lifetime Learning Credit for that student. As with most tax deductions, this item is phased out at higher income levels. |
| * | Hope Education Credit A maximum credit of $1,650 can be claimed as a credit against taxes by an eligible taxpayer. Students in their first two years of post secondary education may qualify for this nonrefundable tax credit. There are a variety of limitations and adjustments that must be taken into consideration in determining if you qualify for the Hope Credit. |
| * | Lifetime Learning Credit A maximum credit of $2,000 may be claimed as an offset against taxes by an eligible taxpayer. The Lifetime Learning Credit is the most flexible and can be claimed by adults not working towards a degree. As with the Hope Credit, you must meet all requirements and limitations to qualify for the Lifetime Learning Credit. |
| * | Student Loan Interest Deduction Qualified taxpayers may be able to deduct $2,500 of interest paid on qualified higher education loans used to pay your college expenses. This deduction is subject to income phase out limitations. |
| * | Coverdell Education Savings Accounts (Education IRA) Taxpayers are now allowed nondeductible contributions up to $2,000 to an account created for the purpose of paying for a qualified beneficiary's higher education expenses as well as their elementary and secondary educations expenses. |
| * | Section 529 Qualified Tuition Savings Plans All 50 states now offer the Section 529 plans in one form or another. Typically, either a "Prepaid Tuition Plan" or "College Savings Plan" is offered by the state. Generally, the distributions from the plans are tax free for qualified expenses. There are various requirements and limitations that must be met to be eligible for participation in the state college savings programs. |
Teachers Tax Breaks
| * | Educator's Deduction Qualified educators can deduct expenses for books, school supplies, computer equipment, and additional materials used in their classroom. The deduction is $250. |
| * | Who is a Qualified Educator? A qualified educator is any teacher, instructor, or principal working 900 hours or more in grades K-12 at a public or private school. |
| * | Where do I get the deduction on my tax return? The deduction is taken on the front of the tax return under the adjustments in order to determine your Adjusted Gross Income. |
| * | Do I need to itemize deductions on Schedule A? No, you are not required to file schedule A to take the deduction. |
IRS eFile
| * | What is e-File? IRS e-file is a way to electronically file a Federal Income Tax Return. It is a fast, accurate, safe, and paperless way to file a return and get your refund in half the usual time - even faster with Direct Deposit. If you owe tax, you can e-file and e-pay in one step. |
| * | What is an Authorized IRS e-File Provider? An authorized e-file provider is a tax professional or firm who has been accepted into the IRS electronic filing program. ZOOMTAX is an IRS authorized e-file provider. |
| * | What do I gain by using IRS e-File? Accuracy! Security! Proof of Acceptance! Fast Refunds with Direct Deposit! Federal/State e-file! Best of all, at Zoomtax, electronic filing is always FREE with paid tax preparation. |
| * | How fast is the refund received with e-file? With IRS e-file, you usually receive your refund within 1-2 weeks if you direct deposit. 2-3 weeks if you receive a paper check. It is a few days faster and safer if you have your refund deposited directly into your bank account. The state refunds usually are direct deposited in a matter of days. |
| * | Is there a fee for IRS e-file? At ZOOMTAX, e-file of your tax return is always FREE with your paid tax preparation. If you've prepared the tax return yourself and would like us to transmit it electronically for you, we will e-file for you for a small data input fee. The IRS does not charge a fee for e-filing. |
| * | If I owe, can I pay my taxes electronically? Yes, you can authorize an electronic funds withdrawal from your checking or savings account at the time your Individual Income Tax Return is prepared. You can also pay by credit card although the credit card issuer may charge a convenience fee for this service. |
| * | How do I know that the IRS has my tax return? The IRS notifies ZOOMTAX within 8-48 hours of transmission that your tax return information was received and accepted or rejected. |
| * | Do I have a greater chance of being audited by the IRS if I e-file? No. The chance of an audit is no greater than with a paper return. |
| * | Can my state tax return be e-filed with my Federal at the same time? Yes in most cases. There are almost 45 states that participate in the IRS e-file program. |
2007 & 2008 Tax Updates
| IRS Business Standard Mileage Rates 2007 & 2008 |
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| * | Business Standard Mileage Rate | 48.5 ¢ 2007 50.5 cents 2008 |
| * | Charitable Mileage Rate | 14 ¢ 2007 14 cents 2008 |
| * | Moving Mileage Rate | 20 ¢ 2007 19 cents 2008 |
| * | Medical Transportation Rate | 20 ¢ 2007 19 cents 2008 |
| 2007 Basic Standard Deductions | ||
| * | Single | $ 5,350 |
| * | Head of Household | $ 7,850 |
| * | Married Filing Jointly | $10,700 |
| * | Married Filing Separately | $ 5,350 |
| * | Qualifying Widow(er) | $ 10,700 |
| * | Dependent | > of $850 or $300 plus earned income (up to the standard deduction) |
| *65 or older/blind receive increased deductions | ||
| Exemptions | ||
| * | $3,400 (before phase-out for high income individuals) | |
| Maximum Earnings Subject to FICA Tax | ||
| * | Social Security Tax (OASDI) | $102,000 |
| * | Medicare Tax | NO LIMIT |
| Gift Tax Exclusion | ||
| * | Annual Gift Tax Exclusion | $12,000 The amount was raised effective for 2006. |
| ($24,000 for a married couple) | ||