For most of us once the New Year begins, we start thinking about income taxes. It was Albert Einstein who said, “The hardest thing in the world to understand is income tax.” Do you feel that way? If so, you are not alone.
Here are some items to be aware of for 2008.
1. Retirement Accounts — The maximum annual contribution limit:
• Individual Retirement Accounts (IRA) – increased to $5,000 ($6,000 if you are age 50 or older).
• 401(k) Plans — Remains at $15,500, ($20,500 if you are age 50 or over).
• Qualified Plan Contributions — Including SEP and Keogh Plans, increased to $46,000.
2. Charitable Donations — All cash contributions (regardless of the amount) to any qualified charity must be supported by a dated bank record (such as a cancelled check, bank or credit card statement) or a dated receipt from the charity that must include the name of the charity, date and the amount of the contribution.
3. The annual gift tax exclusion remains at $12,000 per person and also the estate tax exemption at $2 million.
4. The Standard Mileage Rates —
• Business miles – 50.5 cents a mile.
• Charitable purposes — 14 cents per mile.
• Moving and Medical reasons — 19 cents a mile.
5. Alternative Minimum Tax (AMT) – This has become a looming middle class problem that could push many middle-income families into AMT. For 2007 Congress again passed an AMT “patch” and the exemption amount was $66,250 for joint filers and $44,350 for single filers. For 2008 we will have to stay tuned to see if this is the year for a “fix” or a “patch”.
6. For your business — The maximum section 179 deductions you
can elect for property you placed in service in 2008 is increased to $128,000. This limit is reduced by the cost of section 179 property placed in service during the tax year exceeding $510,000.
For more information contact Rebecca Robins, CPA/PFS, CFP™, CA Insurance Lic#0D75745 at 661-222-2331. Securities offered through Associated Securities Corp. (ASC), member FINRA/SIPC. Advisory services offered through Associated Planners Investment Advisory, Inc (APIA), ASC, David S. Reinders, CFP, Inc., Registered Investment Advisors. David S. Reinders, CFP, Inc. is not affiliated with ASC or APIA. For specific tax advice, we will work with you and your tax advisor. Information and amounts obtained from publications available at www.irs.gov .
For more information, please call 661-222-2331 or visit the office at 25129 The Old Road, Suite 105 in Stevenson Ranch.