What's New for 2008
Newest Updates
- The refundable recovery rebate credit (we gave the heads up on this last year) needs to go on this year’s return. If they did not give you enough, you get the additional amount now.
- First-time homebuyer credit – purchased from April 9, 2008 – July 1, 2009; may not have owned a personal residence during the 3-year prior period, may not have purchased from a related party, up to 10% of the purchase price up to $75,000 ($7,500 REFUNDABLE maximum) – credit is repaid to IRS interest free over 15 years.
- 5% long-term capital gain rate for taxpayers in the 10 and 15% brackets is reduced to 0%
- You may take an additional standard deduction up to $500 if you pay real property tax (on land or home) – even if you can’t itemize
- Business mileage rate before July 1 .505 and after .585; medical and moving .19 and .27 for the same time period, and charitable .14 for the whole year
- The residential energy credit that we had for the last two years expired for 2008 and is back again for 2009.
- Minimum wage $6.55 per hour federal wage rate – MO rate is $7.05
- Sale of personal residence – effective 2009, if you use the home as a rental property for some of the years, you may only be able to exclude some of the gain. Also, if a surviving spouse sells the home, they may exclude up to $500,000 of gain if the sale is no later than two years after the date of death of the deceased spouse
LongTerm Capital Gain Maximum Tax Rates
| For Taxpayers With Ordinary Tax Rate of: | 2008 to 2010 |
| 25% or Higher | 15% |
| 10% or 15% | 0% |
Qualified Dividend Income Tax Rates
| For Taxpayers With Ordinary Tax Rate of: | 2008 to 2010 |
| 25% or Higher | 15% |
| 10% or 15% | 0% |
Charitable Donation of Clothing and Household Items
Effective for contributions made after August 17, 2006 - No deduction is allowed for a charitable contribution of clothing or household items unless the item is in good used condition or better
Charitable Contributions
Effective 2007 - Substantiation rules now require records such as a bank record of a cancelled check or account statement, or a written acknowledgement form the charity, in the case of a cash donation.
Expired Charitable Contributions of IRA Distributions
Effective 2006 and 2007 only - An exclusion from gross income applies for a distribution from an IRA directly transferred by the IRA trustee to a charitable organization. The IRA distribution is not taxed, and the charitable contribution is not deducted.
Expired Tuition and Fees Deduction
Effective for 2004 through 2007 - Qualified education expenses are deductible as an adjustment to income. The Hope and Lifetime Learning Credits are still in effect.
Health Savings Accounts (HSA)
Allows a one time rollover from an IRA to an HSA.
Mortgage Insurance Premiums
Beginning in 2007, premiums paid for qualified mortgage insurance in connection with acquisition indebtedness on a qualified residence is treated as deductible mortgage interest.
Medical Expenses
Medical Standard Mileage Rate: Before 7/1 = $0.19, After 6/30 = $0.27
Medical lodging $50 per night
Miscellaneous Deductions
Business Standard Mileage Rate: Before 7/1 = $0.505, After 6/30 = $0.585
Charitable Deductions
Charitable standard mileage rate: $0.14 per mile for all years
Day Care Providers
Standard Meal and Snack Rates:
| Meals/Snacks | 2008 |
| Breakfast | $1.11 |
| Lunch and Dinner (each) | $2.06 |
| Snacks (each/up to 3) | $0.61 |
Alternative Motor Vehicle Credit
Credit amounts vary by model.
Toyota/Lexus Credit – Zero Credits