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Liberty Tax Tips for filing a 2008 return

ALTERNATIVE MINIMUM TAX GETS ANOTHER “PATCH”

Due to tax provisions of the recently passed Emergency Economic Stabilization Act of 2008, the AMT has been “patched” again.  This means tax relief is in sight for over 20 million Americans who faced a sudden tax hike because they would have qualified for the Alternative Minimum Tax when filing their 2008 tax return.  For tax year 2008, the alternative minimum tax exemption amounts will increase to $46,200 for single and head of household filers, $69,950 for married filing jointly or qualifying widower, and $34,975 for married filing separately.  Taxpayers can also deduct nonrefundable personal credits in 2008 such as the child tax credit to reduce their AMT liability. TOP 

EXTENDED TAX RELIEF FOR SOME FINANCIALLY DISTRESSED HOMEOWNERS

Homeowners experiencing “short sales” and foreclosures will get an extended break for “debt-forgiveness” tax consequences.  Instead of treating cancellation of debt as taxable income on the foreclosure of a principle home, no taxes will be levied on discharges of indebtedness of up to $2 million dollars for married taxpayers filing jointly and of up to $1 million dollars for a married taxpayer filing a separate return through tax year 2012. TOP 

CHANGE FOR THE CHILD TAX CREDIT

For 2008, the child tax credit is refundable to the extent of 15 percent of the taxpayer’s earned income in excess of approximately $12,050. Under the new law, the earned income floor falls to $8,500. TOP 

SALES TAX DEDUCTION CONTINUES THROUGH DECEMBER 31ST, 2009

Liberty Tax Service reminds you that taxpayers can take advantage of state sales tax deductions if they itemize deductions.  Those who live in one of seven states without a state income tax may deduct their state sales tax when they itemize.  Taxpayers in states with state income taxes can choose to deduct their state income taxes or state sales taxes, whichever is more advantageous.  This deduction was renewed with the passage of The Emergency Economic Stabilization Act of 2008 in October, 2008. TOP 

TAX BREAK FOR ELIGIBLE EDUCATORS CONTINUES THROUGH  DECEMBER 31st, 2009

Eligible educators who spend their own money on classroom supplies may qualify for a tax break when filing a 2008 return.  An eligible educator is a kindergarten through grade 12 teacher, instructor, counselor, principal or aide who works at least 900 hours in either a public or private school. The adjustment for these expenses, of no more than $250, can be claimed whether or not the taxpayer can itemize. This deduction was renewed with the passage of The Emergency Economic Stabilization Act of 2008 in October , 2008. TOP 

TUITION AND FEES DEDUCTION CONTINUES

Qualifying higher education expenses such as tuition and fees you paid for yourself, a spouse, or a dependent may be deductible.  The taxpayer cannot claim both this deduction and the Hope or lifetime learning credit for the same student in the same year. This deduction was renewed with the passage of The Emergency Economic Stabilization Act of 2008 in October, 2008. TOP 

DEDUCTIBLE MILEAGE RATES INCREASE

With gas prices soaring, it’s a good time to be taking advantage of all possible tax deductible mileage.  Mileage for some business, medical, charitable, moving, and educational purposes may be deductible.  Here are the new mileage rates that will take effect July 1st through the end of 2008:

• Business mileage: to 58.5 cents per mile from 50.5 cents per mile
• Medical or moving mileage: to 27 cents per mile from 19 cents per mile
• Charitable mileage: stays at 14 cents per mile for 2008.
• Be sure that you document your mileage by keeping a log or other written record. TOP 

MOVING EXPENSES

Liberty Tax Service reminds you that if you’ve moved at least 50 miles during 2008 in order to start work at a new work location, you may be able to deduct some moving expenses. Your moving mileage is deductible at 19 cents per mile from January 1st until June 30th, 2008, and 27 cents per mile from July 1st until the end of 2008.   Deductible moving expenses include the cost of moving furniture and household items as well as your lodging en route. Always be sure to notify the IRS of your relocation, by sending a Form 8822, Change of Address, to the IRS Service Center where you filed your last return. TOP