COAST CITIES — As the economy continues to suffer the effects of the current recession, and as we enter the tax filing season, it may be worth noting that this year especially may be a year that all taxpayers take additional time to review all income, expense, and deduction items reported on their tax return.
Important information regarding new tax incentives, tax credits, and increased benefits can be found in the Emergency Economic Stabilization Act of 2008.
According to Kasey Ortiz at Jes Taxes in Oceanside, the extra time spent in reviewing the tax return may in fact provide many times more in the way of benefits resulting from the recently signed stimulus bill.
Some highlights of the Stimulus Bill include:
— More than 200 new tax law changes, incentives, and credits for most taxpayers filing their 2008 tax return. A few important items included in the many changes are state and local tax deductions, Higher Education tuition deduction, deduction for Real Property Taxes Paid, and Teacher’s Classroom deduction
— State and local tax deductions. This deduction was a part of the Jobs Creation Act of 2004 and expired at the end of 2007. Under the new stimulus bill, this deduction has been extended retroactively back to Jan. 1, 2008.
— Higher Education Tuition deduction — The new law extends the above-line higher education tuition deduction allowed through Dec. 31, 2009. The new law places some filing status and income limits on the amount that is allowed but may provide benefits to many in reducing Adjusted Gross Income.
— Deduction for Real Property taxes paid — For taxpayers who do not itemize deductions, the new law extends the additional standard deduction for real property taxes through 2009. The law allows $500 in additional standard deductions for taxpayers ($1,000 for those filing Married Joint Returns).
— Teacher’s Classroom deduction — For 2008 and 2009, teachers and other education professionals can deduct up to $250 above-line to reduce the Adjusted Gross Income for amounts paid in expense for books, supplies, equipment, and software used in the classroom.
— Increased Child tax credits — The new law provides greater benefits for child tax credits. The credit is currently 15 percent of the earned income in excess of $12,050. Under the new law, the earned income falls to $8,500, thus providing opportunity for more taxpayers to take advantage of this credit. In addition, the law changed the term “qualifying child” with respect to the age of a child and for joint return filers.
— Increased fines and penalties — In addition to the numerous tax incentives contained in the bill, the new law adds a number of new penalties and increases certain penalty amounts for accuracy issues for tax returns filed that may contain mistakes.
Taxpayers are advised to review with their tax professional all of the many new tax law changes that will affect their 2008 tax return filing. Most tax professionals should be willing to offer and provide a free consultation and review to determine if any changes in the law will benefit the filing of the return.
For more information, call Kasey Ortiz at Jes Taxes in Oceanside at (760) 529-9825