Itemized Deductions remain virtually unchanged such as mortgage interest, state & local taxes, medical costs etc. Standard Deductions however have increased with their allowable deduction amounts. Listed below are the Standard & Increased amounts for 2008:
o Standard deduction is $10,900 for couples filing jointly; $5,450 for single taxpayers.
o Standard increased deduction for real-estate property tax is capped at $1,000 for married; $500 for single taxpayers.
o Standard deduction addition for taxpayers who are at least age 65 or blind; $1,050 for each married individual; $1,350 for singles.
[These deduction advantages are ideal for the taxpayer(s) which live mortgage free in a no-income tax state. The advantage here is being able to deduct a total of $14,000 for married/ joint filers both aged 65 or older and had paid at least $1,000 in property tax ($10,900 + $1,000 + $2,100 = $14,000). For the single filer the tax deduction advantage is $7,300 ($5,450 + $500 + $1,350 = $7,300).]
o First-time Homebuyers (if purchased after April 8, 2008; or if you purchase before June 30, 2009 credit may be claimed for 2008 amended return-if already filed) full tax credit of $7,500 for most taxpayers whether married or single filing jointly with an income up to $150,000 & partial tax credit allowed up to $170,000. Full tax credit for singles given for incomes up to $75,000 & partial for up to $95,000.
[The Catch: This credit is essentially an interest free loan and must be repaid over 15 years. If the full tax credit is claimed, $500 will be owed each subsequent year for 15 years beginning in 2010. If the house is sold before full repayment, the balance, limited to the gain on the sale, will be due on your tax return for the year of the sale.]
o Renewed deduction “educator deduction”, qualified teachers may deduct up to $250 out-of-pocket expenses.
o Renewed deduction option of state & local sales taxes instead of state & local income taxes.
[Refer to the IRS table Form 1040 listing deductions, based on household size, income & state of residency, an allowable number will be provided. However, if you are analytically organized enough to have kept all of your 2008 purchase receipts, you can deduct the amount you paid in sales tax. In addition, sales tax paid on various large purchases such as a car, boat, home-building materials may be deducted as well.]
o Renewed deduction of tuition & fees paid for in 2008 has been extended for any college or post-graduate education expense.
[Qualified higher-education costs for married couples filing jointly with incomes up to $130,000 may deduct up to $4,000. Incomes of $130,000 - $160,000 may deduct up to $2,000 only. Single taxpayers & heads of household with an income of up to $65,000 may deduct up to $4,000. Incomes of $65,000 - $80,000 may deduct up to $2,000 only. Deductions may not be applied to a Hope Scholarship or Lifetime Learning students expenses for which a tax credit for 2008 is currently being claimed.]
This of course is only a summary of the vast number of standard, itemized, credit, & renewed deductions being allowed this tax season. My goal is to make individuals aware of existing opportunities in order to help them preserve their hard-earned income and to Inspire Financial Wealth. Please share this valuable information with whomever you feel would benefit by and then you too will Inspire Financial Wealth in another, as it shall then return right back to you.
The author of this article is Abel, a researcher, analyst, learner and educator. Driven to succeed financially and spiritually in order to contribute to his fellow man, Abel studies under the teachings of such distinguished authors as Robert T. Kiyosaki, Sharon L. Lechter, Dan Millman, Steve Forbes, Donald J. Trump, George H. Ross, Thomas J. Stanley, Warren Buffett, and George Soros among many, many more. Abel enjoys his meaningful days as a stay-at-home father, handy-man, husband, friend to all that he has the privilege to encounter and tinkering with his motorized “toys”. His professional experience includes Real Estate Investments/Developments, Bank Negotiations, Home-Based Entrepreneur, Business Owner, Firefighter/Paramedic San Diego County and before fatherhood, community volunteer. You can find Abel and his latest venture at [http://www.inspirefinancialwealth.com/] If you are of the mindset to achieve financial success and then to share what you have learned with others, please visit and learn more. All questions answered, related to subject or not.