Income Tax Law Changes - Benefits for Taxpayers

What's New for 2007

Delay in filing tax returns with certain affected forms due to the AMT late legislation changes.
Legislation has passed a patch to the Alternative Minimum Tax exemption amount for the 2007 Tax Year. Due to this late legislation, 5 forms are being delayed by the IRS to allow them time to update the changes within their system. Customers filing the following forms will be delayed through filing through e-file and through paper file method until February 11th:

Form 8863 - Education Credits
Form 5695 - Residential Energy Credits
Form 8396 - Mortgage Interest Credit
Form 8859 - District of Columbia First-Time Homebuyer Credit
Form 1040A's Schedule 2 - Child and Dependent Care Expenses for Form 1040A Filers (When filing using OLT, if you have Dependent Care Expenses, we will automatically select Form 1040 for you even if you would otherwise qualify for Form 1040 A, this allows your return to be filed on time.

Tax Benefits Extended
The following tax benefits were extended through 2007:

Deduction for educator expenses in figuring adjusted gross income,
Tuition and Fees deduction,
District of Columbia first-time homebuyer credit.

You must file form 1040 to take these credits. Based on information you provide, On-Line Taxes, Inc. will fill in the form needed.

Exemption Amount
The amount of the standard exemption increased to $3,400 each.

Standard Deduction
Married Filing Jointly and Surviving Spouse - $10,700
Head of Household - $7,850
Single - $5,350
Married Filing Separate - $5,350

2007 Standard Mileage Rate
All mileage rates are for effective dates of January 2007 thru December 2007.

Business use - 48.5 cents per mile

Medical and Moving - 20.0 cents per mile

Alternative Minimum Tax (AMT) exemption amount increased

The AMT exemption amount has increased to $44,350 ($66,250 if married filing jointly or a qualifying widow(er); $33,125 if married filing separately).

IRA Deduction Expanded
You may be able to take an IRA deduction if you were covered by a retirement plan and your 2007 modified adjusted gross income (AGI) is less than $62,000 ($103,000 if you arefiling Married Filing Jointly or Qualifying Widow(er))
Also, you may be able to deduct up to an additional $3,000 if you were a participant in a 401(k) plan and your employer was in bankruptcy in an earlier year.

Earned Income Credit (EIC)
You may be able to take EIC if:

A child lived with you and you earned less than $37,783 ($39,783 if married filing jointly), or

A child did not live with you and you earned less than $12,590 ($14,590 if married filing jointly).

Elective Salary Deferrals
The maximum amount you can defer under all plans is generally limited to $15,000 ($10,500 if you only have SIMPLE plans; $18,500 for section 403(b) plans if you qualify for the 15-year rule).