November 24, 2008: 2009 STANDARD MILEAGE ALLOWANCE
The IRS has announced the new Standard Mileage Allowance rates for 2009.
These rates are posted on the WHAT'S NEW FOR 2009 Page of this website.
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June 24, 2008: STANDARD MILEAGE ALLOWANCE RATES INCREASED
According to IR-2008-82:
"The Internal Revenue Service today announced an increase in the optional standard mileage rates for the
final six months of 2008. Taxpayers may use the optional standard rates to calculate the deductible costs of operating
an automobile for business, charitable, medical or moving purposes.
The rate will increase to 58.5 cents a mile for all business miles driven from July 1, 2008, through
December 31, 2008. This is an increase of eight (8) cents from the 50.5 cent rate in effect for the first six
months of 2008, as set forth in Rev. Proc 2007-70.
In recognition of recent gasoline price increases, the IRS made this special adjustment for the final months
of 2008. The IRS normally updates the mileage rates once a year in the fall for the next calendar year.
The new six-month rate for computing deductible medical or moving expenses will also increase by
eight (8) cents to 27 cents a mile, up from 19 cents for the first six months of 2008. The rate for providing
services for charitable organizations is set by statute, not the IRS, and remains at 14 cents a mile."
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February 14, 2008: IMPORTANT NOTICE REGARDING THE
IRS Fact Sheet FS-2008-16 provides the following instructions:
"Individuals who might not otherwise be required to file a 2007 tax return will need to file a return
this year to receive the stimulus payment. The return must show at least $3,000 in qualifying income.
Low-income workers who had at least $3,000 in earned income in 2007 but do not otherwise earn enough
to be required to file a federal tax return need to file a return in order to get the stimulus payment. Likewise, Social
Security recipients, veterans and retired railroad workers who might not otherwise need to file a tax return must do so to
receive the economic stimulus payment."
More information on the "economic stimulus payment" (i.e. the federal rebate checks) to come.
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December 21, 2007: CONGRESS HAS BUSY WEEK BEFORE ADJOURNING
FOR THE YEAR
Last week Congress
sent George W five (5) bills, all of which the President has signed or will sign:
- the Tax Increase Prevention Act of 2007
- the Mortgage Forgiveness Debt Relief Act of 2007
- the Energy Independence and Security Act of 2007
the Technical Corrections Act of 2007
- the Prevent Taxation of Payments to Virginia Tech Victims and Families Act
Increase Prevention Act of 2007 provides for a one-year patch of the AMT for 2007 but does not offset the revenue cost
with revenue raising provisions.
The AMT exemption amounts before phase-out for 2007 for individuals are:
$66,250 for married individuals filing jointly and surviving spouses,
$44,350 for unmarried individuals
(Single and Head of Household),
$33,125 for married individuals filing separately
a temporary fix only. Without future Congressional action, the
AMT exemption amounts for individuals in 2008 will revert to 2000 levels.
In addition, personal nonrefundable credits may
offset AMT and regular tax. For tax years beginning in 2007, the combined total of the following credits is limited
to the sum of: (1) regular tax liability reduced by the foreign tax credit, and (2) the AMT:
Dependent care credit,
Credit for the elderly and permanently and totally disabled,
Child tax credit,
Hope and Lifetime Learning Credits,
Nonbusiness energy property credit for energy-efficient improvements to a principal residence,
Residential energy efficient property credit for photovoltaic, solar hot water, and fuel
cell property, and
First-time DC homebuyer credit.
absent future Congressional action, personal nonrefundable credits,
with the exception of the child tax credit, adoption credit, and the saver's credit, can't exceed the excess of regular tax
liability over tentative minimum tax in 2008.
* The M
ortgage Forgiveness Debt Relief Act of 2007 excludes from taxable income up to $2
Million of “debt forgiveness” from a mortgage secured by a principal residence and incurred in acquiring, constructing
or substantially improving the residence. This relief is available for debt forgiveness
taking place between January 1, 2007 and December 31, 2009.
The relief applies to refinancing of qualifying debt to the extent that the refinancing did not exceed
the amount of the original debt. No relief is provided for home-equity debt where
the funds were not used for substantial improvement to the personal residence. The
forgiveness of home-equity debt where the cash was used to pay off credit card debt, education, medical expenses, etc is fully
The cost basis of the principal residence is reduced by any debt forgiveness income excluded under this relief.
also extends for three (3) years, through December 31, 2010, the deduction
for qualified mortgage insurance premiums. The deduction is permitted for contracts
entered into after December
31, 2006, and prior to January 1, 2011. It is phased-out as AGI goes from $100,000
to $110,000 (or $50,000 tp $55,000 for Married Filing Separate).
Effective with tax years beginning on or
after January 1, 2008, gain on the sale of a personal residence that had been jointly owned by a surviving spouse and a deceased
spouse for the will qualify for the full $500,000 exclusion if the sale closes no later than two (2) years after the date
of death of the deceased spouse. Previously the full exclusion was only available
if the home was sold during the year that the spouse died.
Volunteer firefighters and volunteer “emergency
medical responders” can exclude from income up to $360.00 of refunds, rebates or payments received because of their
volunteer services, effective with tax years beginning after December 31, 2007 (tax year
The "offsets” that “pay for”
the relief apply to partnerships and corporations and do not directly affect the 1040.
* The Energy
Independence and Security Act of 2007 does not include any 1040
tax items. The extension of the current residential energy tax credits did not
make it into the final bill – but may be addressed in 2008 legislation.
The only item of tax consequence involves a one-year
extension of the FUTA (federal unemployment) 0.2% surtax, which had been extended continuously since its initial passage as
a temporary measure in 1976.
* The Technical Corrections Act of 2007 provides some obscure corrections that
do not directly affect most 1040 filers, with the possible exception of a slight change in the definition of the AMT refundable
credit to more effectively utilize long-term unused AMT credits.
* The Prevent Taxation of Payments
to Virginia Tech Victims and Families Act excludes from gross income payments received from a special memorial fund by
victims of the April 2007 Virginia Tech incident.