Keeping up with tax law changes is about as fun as a root canal, which is why so many people rely on tax software or tax professionals to help make sure they have the information they need and are taking advantage of the various means available for reducing their taxes
Riverwoods, IL (Vocus) January 22, 2008
Over the past year, a few hundred pages were added to the federal income tax code and 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 is a Wolters Kluwer business and a leading provider of tax, accounting and audit information, software and services.
"Keeping up with tax law changes is about as fun as a root canal, which is why so many people rely on tax software or tax professionals to help make sure they have the information they need and are taking advantage of the various means available for reducing their taxes," said David Bergstein, CPA, tax analyst for CCH CompleteTax (http://www.CompleteTax.com ). "But it's still a good idea to be an informed taxpayer so that you know the basics, ask the right questions and effectively plan to minimize your taxes throughout the year."
And, this tax filing season, it's not just new tax law changes that are important to know about: the IRS also has changed the mailing addresses for filing income tax returns in several areas, making it all the more attractive to use electronic filing.
According to Bergstein, changes affecting 2007 tax returns come in all flavors from credits and deductions to exemptions and outright exclusions, with more detail on all included in the free CCH CompleteTax Tax Guide (http://www.completetax.com/taxguide/taxguideTOC.asp ). Below are just a few highlights of the changes for 2007, which Bergstein elaborated on in a podcast today:
- Personal exemption. This increased to $3,400 per person for 2007.
- AMT exemption. This increased for 2007 to $44,350 for singles, $66,250 for married filing jointly or a qualified widow(er) and $33,125 for married filing separate returns.
- Standard deduction. This increased for 2007 with the standard deduction for singles and married filing separately, $5,350; heads of household, $7,850; and married filing jointly, $10,700.
- Standard mileage rate. The standard mileage rate deductions for 2007 are 48.5 cents per mile for business use of a vehicle and 14 cents per mile for charitable use. Taxpayers using their vehicles for deductible medical travel or for moving can deduct 20 cents per mile.
- IRA deduction. The maximum IRA deduction allowed per person continued to be $4,000 in 2007. Those who were at least 50 years old can make an additional catch-up contribution of $1,000 to their IRA (through April 15, 2008).
- Residential energy credits. Taxpayers may be able to take a residential energy credit for the costs of having qualified energy-saving items installed in their main home. The credit, available in 2006 through 2007, is subject to a $500 lifetime limitation and no more than $200 of the credit can be used towards the purchase of energy-efficient windows. Another credit is available for alternative energy equipment. This covers up to 30 percent of the cost of solar water heaters, solar electricity equipment and fuel cell plants up to the maximum credit of $2,000 per tax year for each category of equipment and $500 for each half kilowatt of capacity of fuel cell plants installed per tax year.
- Adoption tax credit. The maximum credit allowed for an adoption is $11,390. The credit begins to phase out for taxpayers with modified adjusted gross income over $170,820 and is completely phased out at $210,820.
- Estates. The amount that can be excluded from an estate for estate tax purpose is $2 million for 2007.
- Gifts. The amount of gifts that can be excluded from taxes is $12,000 per taxpayer for 2007.
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 (http://www.CCHGroup.com ) is a leading provider of tax, accounting and audit information, software and services. It has served tax, accounting and business professionals and their clients since 1913. Among its market-leading products are The ProSystem fx® Office, CorpSystem™, 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. Its shares are quoted on the Euronext Amsterdam (WKL) and are included in the AEX and Euronext 100 indices. 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.