But it's still important for people to have a basic understanding of tax rules so that they can be informed taxpayers and look for ways to minimize their taxes throughout the year.
Riverwood, IL (Vocus) January 30, 2009
In the last year, nearly 3,000 pages were added to the federal income tax code; knowing about the changes that impact individual taxpayers is important in helping them minimize what they owe in taxes, according to tax analysts for CCH CompleteTax®, the online tax preparation and electronic filing solution for the do-it-yourself taxpayer from CCH. CCH, a Wolters Kluwer business is a leading provider of tax, accounting and audit information, software and services.
"With a tax code that is now equivalent to more than 33 copies of The New Oxford American Dictionary, it's pretty clear that the average person can't keep up with every rule and regulation, which is why so many people rely on tax software or tax professionals to help make sure they have the information needed to complete their tax returns accurately," said David Bergstein, CPA, tax analyst for CCH CompleteTax (http://www.CompleteTax.com). "But it's still important for people to have a basic understanding of tax rules so that they can be informed taxpayers and look for ways to minimize their taxes throughout the year."
Over the past few years, and this year again, the IRS has changed the mailing addresses for filing income tax returns in several areas, making tax software's ability to easily electronically file tax returns all the more attractive.
According to Bergstein, changes affecting 2008 tax returns run the gamut from credits and deductions to exemptions, exclusions and broad relief in disaster areas after an active 2008 summer storm season. Below are just a few highlights of the changes for 2008, which Bergstein elaborated on in a podcast today; more detail on all are included in the free CCH CompleteTax Tax Guide, on the CCH CompleteTax site:
- Personal exemption. This increased to $3,500 per person for 2008.
- AMT exemption. The AMT exemption increased for 2008 to $69,950 for joint filers and surviving spouses, $46,200 for single filers and $34,975 for married persons filing separate returns.
- Standard deduction. This increased for 2008 to $10,900 for joint filers and surviving spouses; $8,000 for those filing as head of household; and $5,450 for single filers and married persons filing separate returns.
- Temporary property tax deduction added to standard deduction. A temporary deduction, available for 2008 only, allows taxpayers who do not itemize deductions a limited deduction for state and local real property taxes. This increases the amount of their standard deduction by the amount of real property taxes they paid in 2008 or by $500 ($1,000 for joint filers), whichever is less.
- Standard mileage rate. The standard mileage deduction rate for business and medical travel for 2008 split at mid-year. From January 1 through June 30, 2008, the deduction was 50.5 cents per mile for business and 19 cents for medical travel; and from July 1 through the end of the year, the deduction was 58.5 cents for business and 27 cents for medical travel. The standard mileage rate for charitable travel remained the same throughout 2008 at 14 cents per mile.
- IRA deduction. The maximum IRA deduction allowed per person increased to $5,000 in 2008. Those who were at least 50 years old can make an additional catch-up contribution of $1,000 to their IRA (through April 15, 2009).
- Recovery rebate credit. People who did not receive a full economic stimulus payment based on their 2007 income tax returns may be eligible for a recovery rebate credit. The recovery rebate credit is based on a taxpayer's 2008 tax situation, which may be different from 2007, making them eligible for additional rebate credit.
- First-time homebuyer credit. A first-time homebuyer credit of up to $7,500 can be claimed by taxpayers who purchased their first home after April 9, 2008. This credit also will be available in 2009 to taxpayers purchasing their first home before July 1, 2009.
- Estates. The amount that can be excluded from an estate for estate tax purpose remains $2 million for 2008.
- Gifts. The amount of gifts that can be excluded from taxes remains $12,000 per taxpayer for 2008.
- Tax relief. Taxpayers in two disaster areas: the Kansas disaster area (May 4, 2008 storms) and the Midwestern disaster areas (May 20 - July 30, 2008 storms and flooding) are subject to a variety of tax benefits including special rules to allow for borrowing from IRAs and other qualified retirement accounts.
About CCH CompleteTax
CCH CompleteTax, an online tax preparation and e-filing service for the do-it-yourself taxpayer, continues to set the standard when it comes to making online tax prep and e-filing easy, efficient and affordable. CCH CompleteTax offers comprehensive support to help taxpayers through each step of preparing and e-filing both federal and state income tax returns.
About CCH, a Wolters Kluwer business
CCH, a Wolters Kluwer business (CCHGroup.com) is a leading provider of tax, accounting and audit information, software and services. It has served tax, accounting and business professionals since 1913. Among its market-leading products are The ProSystem fx® Office, CorpSystem®, CCH® TeamMate, CCH® Tax Research NetWork™, Accounting Research Manager® and the U.S. Master Tax Guide®. CCH is based in Riverwoods, Ill.
Wolters Kluwer is a leading global information services and publishing company. The company provides products and services globally for professionals in the health, tax, accounting, corporate, financial services, legal and regulatory sectors. Wolters Kluwer has annual revenues (2007) of €3.4 billion ($4.8 billion), maintains operations in over 33 countries across Europe, North America and Asia Pacific and employs approximately 19,500 people worldwide. Wolters Kluwer is headquartered in Amsterdam, the Netherlands. For more information, visit http://www.wolterskluwer.com.
EDITORS' NOTE: Federal income tax code page counts are based on the CCH Standard Federal Tax Reporter, a leading tax resource for professionals.