Posted by Brian McCullough
Continuing our efforts to get prepared for the tax man, I found a great rundown of some of the major tax code changes that are applicable this year.
Unfortunately, the article his here, behind the LATimes subscription firewall. The link might work cleanly, or it might not. If not, try searching for “untangling the tax code latimes” at news.google.com.
If that doesn’t work, I’m gonna go ahead and sum up some of the more important changes, just to get the info out there.
First, here are the tax breaks that are going away. Your 2007 return is the last time to claim:
- The tuition and fees deduction. Bummer if you have a kid in college or are doing continuing education for a better degree.
- But the teachers get screwed too. This is the last year for the educator expense deduction, which lets schoolteachers to write off up to $250 in out-of-pocket classroom expenses.
- And this is the last year to claim breaks on home energy improvement purchases. This means more energy efficient windows, water heaters, etc.
You gotta hand it to the government. Those all sound like excellent tax breaks to eliminate!
Now for the list of new deductions!
I’m going to quote selectively from the article. Please read the full thing for all the details:
* Mortgage insurance write-offs. Mortgage insurance premiums are now deductible, but there are caveats. (…)
* Debt cancellation exclusion. Before last year, if you lost your house in foreclosure or were forced to sell it for less than the loan amount, you’d typically be subject to “debt cancellation income.” The short version: The IRS assessed income tax on the money you didn’t have to pay back. (…) For 2007 through 2009, debt cancellation on your primary residence, whether as the result of a so-called “short sale” or a foreclosure, is not taxable. (…)
* Charitable receipts. The IRS will no longer take your word for the $20 you put in the collection plate each week (…) You need to either write a check or get a receipt for every donation. (…)
* AMT credit. If you paid the alternative minimum tax in a prior year because of a phantom gain, you might qualify for a refundable credit in 2007 (…)
* Child exemptions. The clarification of rules stipulating who can claim a child as a dependent allows some unmarried partners and grandparents to take tax write-offs for children they support who might live with a parent.
* Kids and taxes. Children under the age of 18 may have to pay tax on unearned income at their parents’ marginal rate. (…)
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