Items to consider when filing your 2008 Tax returns

Well its tax time, and before you know it April 15 will be here. It's amazing how time flies! Do you have all your papers together? Here are some tips to get you going in things you may not have known about.

1. Economic stimulus payment. You may have received an economic stimulus payment in 2008, based on your 2007 taxes. If so, don’t include it as income on your tax return. It’s not taxable. If you didn’t receive a payment, you may be eligible for the recovery rebate credit, as explained below. You may even qualify for that credit if you did receive an economic stimulus payment.

2. Standard deduction increased by real estate taxes. Suppose you own a home and pay real estate taxes but don’t have enough total deductions to be able to itemize. Good news: You can increase your standard deduction by the state and local real estates taxes you paid, up to $500 ($1,000 if married filing jointly).

3. First-time homebuyer credit. Qualified homebuyers can subtract the credit amount from their federal income tax when they buy the home and even get a refund if the credit exceeds the tax. However, they must pay the credit back over 15 years. The result is that the credit resembles an interest-free loan that must be repaid to the government. Here are the details:

• The home must be located in the U.S. and must be your principal residence (main home). You (and if married, your spouse) must not have owned another principal residence in the U.S. in the three-year period before purchasing the new home. Thus, the home doesn’t literally have to be your first home.
• The home must have been purchased from April 9, 2008 through June 30, 2009, inclusive.
• A special rule allows taxpayers who purchase a principal residence in the first six months of 2009 to treat the purchase as if made on Dec. 31, 2008. This allows the taxpayer to claim the credit for 2008 rather than 2009.
• The credit is equal to 10 percent of the price paid for the home, up to a maximum of $7,500. The $7,500 maximum credit applies both to individuals and married couples filing a joint return. A married individual filing separately can claim a maximum credit of $3,750.
• The credit is phased out for individual taxpayers with modified adjusted gross income (AGI) between $75,000 and $95,000 ($150,000 and $170,000 for joint filers) for the year of purchase. Taxpayers with modified AGI over $95,000 ($170,000 for joint filers) can’t claim the credit.
• In the second year after purchase, taxpayers who took the credit must start paying back the credit in equal installments over 15 years, with no interest charge.
• No credit is allowed if: the taxpayer or the taxpayer’s spouse was ever entitled to a D.C. homebuyer credit; the home purchase was financed through tax-exempt mortgage revenue bonds; the taxpayer is a nonresident alien; or the taxpayer disposes of the residence (or it ceases to be a principal residence) in the year of purchase.

4. Standard mileage rates. The 2008 rate for business use of one’s vehicle is 50 1/2 cents a mile (58 1/2 cents a mile after June 30, 2008). The 2008 rate for use of one’s vehicle to get medical care or to move is 19 cents a mile (27 cents a mile after June 30, 2008).

These are just a few. IF you would like to see more you can visit here to see more. If you have any questions you can contact me by phone.