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ROBERT D. FLACH, LLC

WHAT'S NEW FOR 2008

ROBERT D. FLACH TAX PLANNING INSTITUTE
TAX HISTORY
SPEAKING OF TAXES
ROBERT D. FLACH, LLC HOMEPAGE
 

CLICK HERE TO DOWNLOAD THE 2008 TAX RATE SCHEDULES

 
The Alternative Minimum Tax (AMT) exemption amounts are -
  • $46,200 for Single and Head of Household
  • $69,950 for Married Filing Joint and Qualifying Widow(er)
  • $34,975 for Married Filing Separate

Most personal credits can be applied against the AMT.

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The deduction for each personal exemption is $3,500.00
 
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The phase-out ranges for deducting personal exemptions are:
  • AGI of $159,950.00 to $282,450.00 for Single
  • AGI of $239,950.00 to $362,450.00 for Married Filing Joint Return and Qualifying Widow(er)
  • AGI of $119,975.00 to $181,225.00 for Married Filing Separate Return
  • AGI of $199,950.00 to $322,450.00 for Head of Household

The phase-out of personal exemptions is reduced by 2/3.  The exemption amount for taxpayers with AGI in excess of the maximum phase-out amount is $2,333.00.

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The standard deduction amounts are:

  • $  5,450.00 for Single
  • $10,900.00 for Married Filing Joint Return and Qualifying Widow(er)
  • $  8,000.00 for Head of Household
  • $  5,450.00 for Married Filing Separate Return

The additional standard deduction amounts for age 65 and older and/or blind are:

  • $1,350.00 for Single and Head of Household
  • $1,050.00 for for Married (Joint and Separate) and Qualifying Widow(er)

Taxpayers who do not itemize can deduct as an additional standard deduction up to $500 ($1,000 if Married Filing Joint) for Real Estate Taxes paid. 

The standard deduction for a dependent is the greater of $900.00 or the sum of $300.00 and the dependent's earned income, not to exceed $5,450.00 (plus $1,350.00 if age 65 or blind).    

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The reduction of itemized deductions for all filers except Married Filing Separate Return begins with AGI of $159,950.00.  For Married Filing Separate Return, the reduction begins at AGI of $79,975.00.

The phase-out of itemized deductions is reduced by 2/3.

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The standard mileage allowance rates are - 

January 1 - June 30, 2008:

  • 50.5 cents per mile for business travel 
  • 19 cents per mile for medical travel
  • 19 cents per mile for travel related to deductible moving expenses reported on Form 3903
  • 14 cents per mile for charitable travel

July 1 - December 31, 2008:

  • 58.5 cents per mile for business travel
  • 27 cents per mile for medical travel
  • 27 cents per mile fpr travel related to deductible moving expenses reported on Form 3902
  • 14 cents per mile for charitable travel

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The annual contribution limits for retirement plans are:

  • $15,500.00 (plus an additional $5,000.00 if age 50 or older at the end of 2008) for 401(k) and 403(b) plans 
  • $15,500.00 (plus an additional $5,000.00 if age 50 or older at the end of 2008) for 457 plans (Deferred Compensation for state and local government employees) 
  • $10,500.00 (plus an additional $2,500.00 if age 50 or older at the end of 2008) for SIMPLE plans 
  • $46,000.00 for Defined Contribution KEOGH plans
  • $46,000.00 for Self-Employed SEP plans (allowable contribution equal to 25% of net earnings up to $230,000, which translates to 20% multiplied by the total of "net earnings from self-employment" from Schedule C, Schedule C-EZ or Form K-1 less the deduction for 50% of self-employment tax)
  • $5,000.00 (plus an additional $1,000.00 if age 50 or older at the end of 2008) for traditional or ROTH Individual Retirement Accounts (IRA)

The compensation limit for participation in a SEP is $500.00.

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The limits for qualified transportation fringe benefits are:

  • $220 per month for qualified parking
  • $115 per month for transit passes and transportation in a commuter highway vehicle 

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The phase-out ranges for the exclusion of EE and I Bond interest when the bond proceeds are used for qualifying education expenses are:

  • AGI of $67,100.00 - $  82,100.00 for Single and Head of Household
  • AGI of $100,650.00 - $130,650.00 for Married Filing Joint Return

Taxpayers filing Married Filing Separate Return are not eligible for the exclusion.

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The earnings base for Social Security withholding on wages and the Social Security portion of self-employment tax is $102,000.00.

The maximum amount of Social Security tax to be withheld from wages is $6,324.00.  The maximum Social Security portion of self-employment tax is $12,648.00.

The Medicare Part B monthly premium is $96.40.

The income-based Medicare Part B monthly premiums are:

SINGLE:
Premiums - - Income of:
$  96.40 - - - $82,000 or less
$122.20 - - - $82,001-$102,000
$160.90 - - - $102,001-$153,000
$199.70 - - - $153,001-$205,000
$238.40 - - - Above $205,000

MARRIED FILING JOINT:
Premiums - - Income of:
$  96.40 - - - $164,000 or less
$122.20 - - - $164,001-$204,000
$160.90 - - - $204,001-$306,000
$199.70 - - - $306,001-$410,000
$238.40 - - - Above $410,000

MARRIED FILING SEPARATE:
Premiums - - Income of:
$  96.40 - - - $820,000 or less
$199.70 - - - $82,001-$123,000
$238.40 - - - Above $123,000

The income base used to determine the above premiums is AGI plus tax-exempt interest.

The earnings limitations are:

1) Under Full Retirement Age - $13,560.00 per year or $1,130.00 per month ($1.00 in benefits lost for every $2.00 in earnings above the limit).

2) The Year You Reach Full Retirement Age - $36,120.00 per year or $3,010.00 per month (applies only to earnings for months prior to reaching full retirement age - no limit on earnings beginning the month you reach full retirement age; $1.00 in benefits lost for every $3.00 in earnings above the limit).

There is no limit on earnings beginning the month an individual reaches full retirement age.

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Wages paid to a household employee – an individual providing domestic service in the employer’s private home - will not be subject to FICA tax if they total less than $1,600.00 for the year.

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A day care provider located in the continental US can deduct, in lieu of actual expeneses, the following standard meal allowances:  

  • $ 1.11 per child for breakfast
  • $ 2.06 per child for lunch or dinner
  • $   .61 per child for snacks

Different per diems apply to Alaska and Hawaii.

These rates include beverages, but not non-food supplies such as container, paper products or utensils.

The provider can elect to use either the actual expenses or the per diem amounts indicated above, but must use the selected method for the entire tax year.

A log must be kept indicating the number of meals and snacks served to each child. 

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The phase-out ranges for deducting student loan interest are:

  • AGI of $55,000 to $70,000.00 for Single, Head of Household and Qualifying Widow(er)
  • AGI of $115,000.00 to $145,000.00 for Married Filing Joint Return

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The phase-out ranges for an IRA deduction by an active participant in an employer plan are:

  • Modified AGI of $53,000 to $63,000 for Single or Head of Household
  • Modified AGI of $85,000 to $105,000 for Married Filing Joint
  • Modified AGI of $0 to $10,000 for Married Filing Separate

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Contribution limits for a Health Savings Account is the lesser of the annual deductible or $2,900.00 for individual coverage or $5,800 for family coverage. 

A "high deductible plan" is one that has a deductible of at least $1,100.00, with a maximum "out of pocket" of $5,600.00, for individual coverage, and at least $2,200.00, with a maximum "out of pocket" of $11,200.00, for family coverage.

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For purposes of qualifying for an Archer Medical Savings Account, a "high deductible plan" is one that has a deductible of between $1,950.00 and $2,900.00, with a maximum "out-of-pocket" of $3,850.00, for individual coverage, and between $3,850.00 and $5,800.00, with a maximum "out-of-pocket" of $7,050.00, for family coverage.

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Long-term care insurance premiums, based on a taxpayer's age, are:

  • Age 40 or less = $310.00
  • Age 41 - 50 = $   580.00
  • Age 51 - 60 = $1,150.00
  • Age 61 - 70 = $3,080.00
  • Age 70 or older = $ 3,850.00

The deduction for long-term care services is limited to $270 per day.

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The maximum Section 179 deduction for first-year expensing of business equipment is $128,000.00.

The dollar-for-dollar phase-out of Section 179 expensing begins when a taxpayer places more than $510,000.00 of qualifying assets in service during the year.

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If the total Child Tax Credit exceeds the amount of tax liability, the excess credit is refundable to the extent the smaller of -

  • The amount of the Child Tax Credit remaining after reducing regular tax or AMT to "0", or 
  • 15% of the taxpayer's earned income in excess of $8,500.00.

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The HOPE education credit is 100% of the first $1,200.00 of qualified tuition and fees and 50% of the next $1,200.00, for a maximum of $1,800.00

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The phase-out ranges for the Hope and Lifetime Learning Credits are:

  • AGI of $48,000.00 to $58,000.00 for Single, Head of Household, Qualifying Widow(er)
  • AGI of $96,000.00 to $116,000.00 for Married Filing Joint Return

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The Modified AGI amounts for determining the Retirement Savings Contribution s Credit are:

SINGLE, MARRIED SEPARATE, QUALIFYING WIDOW(ER)

$        0 - $16,000 = 50%

$16,000 - $17,250 = 20%

$17,250 - $26,500 = 10%

 

HEAD OF HOUSEHOLD

$         0 - $24,000 = 50%

$ 24,000 - $25,875 = 20%

$ 25,875 - $39,750 = 10%

 

MARRIED FILING JOINT

$         0 - $32,000 = 50%

$ 32,000 - $34,500 = 20%

$ 34,500 - $53,000 = 10%

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The maximum amount of the adoption credit and the maximum amount of employer-provided adoption assistance benefits that are excluded from taxable income is $11,650.00 per eligible child.  The credit is phased-out as AGI goes from $174,730.00 to $214,730.00.

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In order to be eligible to claim the Earned Income Credit (EIC), investment income cannot exceed $2,950.00.

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The phase-out ranges for the ability to contribute to a ROTH IRA are:
  • Modifed AGI of $101,000.00 to $116,000.00 for Single and Head of household, and
  • Modified AGI of $159,000.00 to $169,000.00 for Married Filing Joint and Qualifying Widow(er)
  • Modifed AGI of $0.00 to $10,000.00 for Married Filing Separate 
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Taxpayers may roll over distributions from a qualified retirement plan such as a 401(k), a 403(b) or a governmental 457 directly into a ROTH IRA.
 
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The "kiddie tax" rules apply to dependent children under age 19, or under age 24 if a full-time student.
 
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The maximum foreign earned income exclusion is $87,600.
 
 
IF YOU DISCOVER AN ERROR IN THE ABOVE NUMBERS PLEASE EMAIL ME AT rdftaxpro@mail.com.
 

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