Taxpayers should be aware of important changes to the tax law before
they complete their 2007 federal income tax forms. Here are some
changes that may affect your return.
- AMT Exemption Increased for One Year. For tax-year 2007, Congress
raised the alternative minimum tax exemption to $66,250 for a married
couple filing a joint return. The exemption rises to $33,125 for a
married person filing separately and to $44,350 for singles and heads
of household. While the vast majority of taxpayers can file as usual,
about 13.5 million taxpayers who file any of five tax forms affected by
recent tax law changes related to the AMT will have to wait until Feb.
11, 2008, to file their returns. IRS.gov has more information on this
important subject, including downloadable copies of affected forms and
questions and answers.
- Extender Tax Breaks Reappear on IRS Forms. Several popular tax
breaks, renewed too late to be included on 2006 forms, once again
appear as separate items on various 2007 IRS forms. As a result, unlike
last year, eligible taxpayers will no longer have to follow special
instructions in order to claim the deduction for state and local sales
taxes, the educator expense deduction and the tuition and fees
deduction.
- Saver’s Credit. This year for the first time income limits for the
saver’s credit are adjusted for inflation. The saver’s credit
supplements other tax benefits available to low- and- moderate income
taxpayers who save for retirement. Begun in 2002 as a temporary
provision, the saver’s credit is now a permanent part of the tax code.
Use Form 8880 to claim the credit.
- Mortgage Insurance Premiums May be Deductible. Some borrowers may
be able to deduct mortgage insurance premiums paid on mortgages taken
out or refinanced during 2007. The deduction for mortgage insurance
premiums is phased out for taxpayers with adjusted gross incomes
exceeding $100,000 ($50,000, if married filing separately). Claim this
deduction on Schedule A, Line 13. Further details are in Publication
936.
- New Rules for Giving to Charity. To deduct any charitable donation
of money, taxpayers must have a bank record or a written communication
from the recipient showing the name of the organization and the date
and amount of the contribution. Though taxpayers are already required
to keep records to support their contribution deductions, this new
provision is designed to provide greater certainty, both to taxpayers
and the government, in determining what may be deducted as a charitable
contribution. See Publication 526.
More information about the changes can be found on IRS.gov and in
various IRS documents, including the Instructions for Form 1040.
Remember that for the genuine IRS Web site be sure to use .gov.
Don't be confused by internet sites that end in .com, .net, .org or
other designations instead of .gov. The address of the official IRS
governmental Web site is www.irs.gov.
