Tax Law Changes for 2007 - Do They Affect You?

Posted: 12 Feb 2008 | Categories: Taxes

Each tax year it seems our friends in congress work hard to complicate the tax code. Throw in IRS regulations and court rulings and we have a proper mess that we have to sort through every year. So before you send in your tax return for 2007 here are a few changes you should check before you send in your return.

If you closed on a home loan after December 31, 2006 until January 1, 2011 you can deduct the mortgage insurance premiums for the first time. If your adjusted gross income is in excess of $100,000 and you file jointly, the allowable deduction is reduced by 10% for each $1000 over the base or $100,000.

If you used your personal vehicle in job related mileage the rate increased to 48.5 cents per mile. In addition, medical and moving expense mileage is 20 cents a mile.

Teachers are allowed to deduct up to $250 in un-reimbursed classroom expenses. If you are repaying a student loan you are allowed to deduct up to $2500 in interest. Also, in the education area if you are going back to school or taking continuing education courses related to your job the cost can be deducted if your employer does not reimburse you. However, be careful you can’t take the deduction if the education is training you for a change in careers.

If you deduct charitable contributions you should have a record or receipt from the charity showing the date and amount of the donation. Other donations like in-kind donations should also be documented. An excellent method of documenting the donation is to take a picture of the items to show their condition.

The earned income tax credit for 2007 for families rose to $2853 for one child, $4716 for two children and $428 for taxpayers who can claim the credit without qualifying children. The income ceiling also increased. Review the IRS form 596 for further information. And don’t forget your state earned income tax credit, the DC and 20 states currently have a program similar to the federal model.

The standard deduction in2007 rose to $5350 for single taxpayers or married filing separately. For head of household it is now $7850. For married filing jointly or qualifying widows or widowers the standard deduction is now $10,700.

For taxpayers 65 or older the additional deduction rose to $1300 for single or head of household and to $1030 for married filing jointly married filed separately and qualifying widows and widowers.

Before you start on your federal and state tax returns it pays to get organized. Do you have all your W-2s and 1099’s? Get all the documentation together and if you are hiring some to do your return they will thank you. If you are using a software program it will go smoother if you have all the information in front of you. And if you are still using the tried and true method of pen and calculator it will go easier with all the preliminaries completed ahead of time.

Andy Andersohn is a small business owner and long time tax preparer. On his site learn more Valuable Tax Planning Tips for business owners and individuals. He also offers a FREE 11 page Tax Saving Guide. At his Tax Help Guide discover more tax help and money saving tax ideas.

Article Author :Andy_Andersohn