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TAX HIGHLIGHTS – October 2008
In the coming months, we will post tax highlights on our website to keep you abreast of the rapidly changing tax code. As the nation’s economy continues to sort itself out and we begin to see the effects of the recent $700 Billion Bailout/Rescue bill, we also see the effect of the tax relief provisions which were included in the bill. Included here is a summary of the tax provisions only and not information on the economic rescue policies of the bill.
When You Can’t Beat ‘Em…
The Senate decided to attach a bill that included tax relief along with the very controversial rescue legislation. Here are the provisions included:
AMT Relief –
While this is far from a complete fix to what is a flawed AMT system, the exemptions for 2008 have been raised to $69,950 for marrieds and $46,200 for singles. Presumably, this is enough to keep more taxpayers from being exposed to the AMT this year over last year.
Tax-free direct payouts from IRAs to charities can be made in 2008 and 2009.
Some popular items ...
... received two-year extensions – the deduction for sales tax, the college tuition deduction and the deduction for teachers’ supplies. These three very advantageous items were slated to expire this year and I am very happy to see that they were extended for another two years.
There’s even something...
... for bicycle commuters – Employers can give them up to $20/month for the costs of pedaling to work, such as the bike’s cost, repairs and storage.
Qualified leasehold improvements for restaurant and for tenant improvements ...
...are still classified as 15 year assets. For 2009, this break is expanded to cover new restaurants and retail stores.
Energy breaks –
Coal and wind energy credits will apply through 2009, as well as the biodiesel credit. The 30% solar energy and fuel cell credits get a long-term extension to 2016!! The residential solar credit also lasts through 2016 and the $2,000 cap is repealed! Expensing energy saving improvements to commercial realty will run through 2013, and the tax credit for energy efficient home improvements won’t lapse until 2017! Finally, some attention was paid to these energy credits. Now, if we can just get the dollar amounts to increase on them….
There were revenue raisers added to the bill to offset the cost of these credits and deductions, which is an improvement over last year’s buffet of credits and deductions without revenue offsets. I completely understand that tax increases are never popular, but to avoid further dunking our country in more red ink we have to accept revenue raisers.
Now comes my commentary:
I believe these tax provision extenders and additions to an already unpopular bill were absolutely necessary to shore up tax credits and deductions which actually benefit my clients. I hated to think of the AMT impact on my clients if something wasn’t done to raise the exemption amounts. I also hated to see the loss of the college tuition deduction, as several of my clients were able to utilize that deduction when the Hope and Lifetime Learning Credits didn’t help them at all. Finally, why take away the $250 in teachers’ supplies? Please, it is a small thing but one tiny act of recognition for a professional that is already undervalued and overlooked.
Lastly, political party allegiances aside, never has it been more important for you to vote and voice your opinions than now. If you are a registered voter, make sure you vote this year and do your part to better our country. Become as informed as you can and vote for your choice to lead our country for the next four years as we navigate some treacherous waters.
As more information becomes available to us, we will update you. Please review our website for other important updates as tax season comes upon us. We look forward to seeing all of you soon!
