|LOOKING AHEAD AFTER 2007
TAX CHANGES and MORE
Points Of Interest
IRS INCREASES BUSINESS STANDARD MILEAGE RATE Beginning July 1, 2008, the IRS has increased the Automobile Business Standard Mileage Rate to 58 1/2 cents per mile. This is up from 50 1/2 cents per mile. So, for your 2008 taxes, business mileage rates are divided into two rates: 50 1/2 cents from 1/1 until 6/30, and 58 1/2 cents from 7/1 until 12/31. All taxpayers who use this rule are advised to keep two seperate mileage logs; one for each timeframe. The 58 1/2 cents per mile rate will be effective until the IRS issues a new rate.
CONTRIBUTION LIMITS INCREASE
For individuals under 50 years of age, the annual
IRA (both Traditional and Roth IRA) maximum contribution
will increase to $ 5,000, with indexing to inflation
cost-of-living increases thereafter.
The taxpayer who is 50 or above during 2008 enjoys
the “Catch-Up” provision that raises this limit to $
RETIREMENT PLAN CONTRIBUTIONS
The $ 15,500 deferral limit that applied to
401(K), 403(B), SEP and 457 plans will have inflation
indexing for 2008 and later years.
The SIMPLE IRA deferral limit, which will be $ 10,500
for 2008, will also be inflation-indexed for later years.
The SIMPLE IRA “over age 50” limits will also be
$ 2,500 for 2008, and will also be inflation-indexed.
These favored rates have been extended for years
through 2010. For
taxpayers with a top tax bracket over 15%, the rate of 15%
will apply to net Capital Gains and Qualified Dividends
those with a top bracket of 10% or 15% other than for
children subject to the “Kiddie Tax”, there will be a 0%
rate on net Gains and Qualified Dividends received in
IRA CONVERSIONS FAVORABLE AFTER 2009
Beginning in 2010, all taxpayers, even those
whose Adjusted Gross Income (AGI) is over $ 100,000, will be
able to convert a Traditional IRA to a Roth IRA.
TAX CREDIT REMAINS UNCHANGED
The $ 1,000 credit per Qualifying Child will
remain through 2010.
TAX AGE LIMIT INCREASED
Starting in 2008, the Kiddie Tax age limit is
increased from the child being 18 to all full-time students
up to 23 years of age.
YEAR BUSINESS EXPENSING LIMITS
continue to be indexed to inflation cost-of-living.
For 2007, the limit was $ 125,000 on new business
equipment put in service.
After 2010, current laws in place, the limit will
drop to $ 25,000.
ROLLOVERS FROM RETIREMENT TO ROTH
Plans will be allowed, subject to the Roth
Taxpayer can directly rollover, from his 401(K),
403(B), or 457 plan funds to their Roth IRA without being
charged the 10% early withdrawal penalty and if their AGI is
$ 100,000 or less.
PRODUCTION ACTIVITIES DEDUCTION
stays at 6% for 2008 and 2009, and
increases to 9% for 2010.
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28 Batavia City Centre Batavia, NY 14020
Union Road Cheektowaga, NY 14227
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