Married filing joint returns and surviving spouses:
If taxable income is: The tax is:
Not over $16,050 ……………………………………………….. 10% of taxable income
Over $16,050 …………………………… $1,605.00 + 15% of excess over $16,050 (but not over $65,100)
Over $65,100 …………………………… $8,962.50 + 25% of excess over $65,100 (but not over $131,450)
Over $131,450 …………………….. $25,550.00 + 28% of excess over $131,450 (but not over $200,300)
Over $200,300 ……………………… $44,828.00 + 33% of excess over $200,300 (but not over $357,700)
Over $357,700 ……………………… $96,770.00 + 35% of excess over $357,700

Heads of household:
If taxable income is: The tax is:
Not over $11,450 ……………………………………………….. 10% of taxable income
Over $11,450 …………………………… $1,145.00 + 15% of excess over $11,450 (but not over $43,650)
Over $43,650 …………………………… $5,975.00 + 25% of excess over $43,650 (but not over $112,650)
Over $112,650 …………………….. $23,225.00 + 28% of excess over $112,650 (but not over $182,400)
Over $182,400 ……………………… $42,755.00 + 33% of excess over $182,400 (but not over $357,700)
Over $357,700 ……………………. $100,604.00 + 35% of excess over $357,700

*These tables are for 2008 taxes and are provided to assist you in tax planning (such as figuring estimated tax) for the current year. For 2007 tax tables, refer to your 1040 Forms and Instruction booklet, Package 1040-3, or other Official IRS publication.
© 2007, Real Estate Information Services, Capitol Assets, Choice Real Estate, Inc. & Choice Real Estate of VA, Inc., & Choice Finance®

For the most thorough job of tax planning possible, consult a tax professional.  
Tips for filing your 2007 return
Key provisions in doubt for ‘08

    
Mark Zaidan, Choice Finance Corporation

Tips for filing your return
The key to maintaining your sanity through tax season is organization. This is especially important if you are preparing your own tax returns. While tax filing software has made the job much easier, it will still require you to input the appropriate information, so start early to assemble it. Think about using personal finance software if you are not already doing so. 

Even if you use a tax professional to do the job, they can do the most thorough and complete job only if you present them with all the information they need from the start. This is the best way to maximize your chances of minimizing your tax tab.   Self-filers will find attacking the task in bite-size pieces can help make the whole more digestible. The IRS points out that rushing leads to mistakes, such as math errors and incorrect entry of social security numbers, which can delay refunds.  Here are the basic documents and forms you will need.

Documents:
The essentials are W-2 forms from your employer(s) and 1099 forms from organizations from which you have reportable income. These must be mailed by February 1.  If you are a subchapter S corp shareholder, you will get a K-1, which must be mailed by March 1. You’ll also need the 1098 form from your mortgage lender reporting home mortgage interest and property taxes paid (if you do not pay them directly).  When mutual fund sales are reported to you, your average cost basis of the shares is usually included.  Sales of stocks and bonds will probably require you to refer to your own records to determine whether you had gains or losses.  Be sure to find the purchase dates and cost basis for the investments sold, which will be information necessary to fill out your Schedule D (Capital Gains and Losses).  Did you add a dependent in 2007?  You need taxpayer identification numbers (for a new baby, that will be a Social Security number) for family members to claim them as a dependent.  If you claim tax benefits for a resident or nonresident alien who is not eligible for an SSN, you should file an IRS Form W-7, Application for IRS Individual Taxpayer Identification Number.  For cash charitable contributions, you now need either a bank record (a cancelled check or a bank or credit card statement) or a written communication from the charity showing the amount and date of the contribution.

Cash contributions of more than $250 require an acknowledgment from the charity.  Non-cash contributions of less than $250, more than $250 but less than $500, and more than $500 each have specific recordkeeping requirements that must be met. Further, no deduction is now allowed for contributions of used clothing or household items unless they are in at least “good”condition. An exception to the general rules is made for property worth more than $500 for which you have an appraisal.  For donations of vehicles, if the claimed value is more than $500, you must have a written acknowledgment from the charity and you must attach it to your return. The acknowledgment must include your taxpayer identification number, vehicle identification number and date of the contribution.  If the vehicle was sold, the charity also must include the price at which it was sold and certify that the sale was an arm’s-length transaction. If the charity made significant use of or fixed up the vehicle, then a deduction can be taken for the fair market value, subject to additional certifications. 

Forms:
If you are filing the same forms this year as last, the IRS has probably already sent you the appropriate package. However, if you moved, are itemizing for the first time (especially anyone who bought their first home in 2007), or started a business, for example, you will need additional forms.  You can download forms from the IRS at www.irs.gov.   You can also use a fax machine to request items. Call 703-368-9694 (not a toll-free call) from your fax machine.  Got all the documents and forms you need?

Consider these items:
Valuing deductions for aluing contributions of items to charity.
Estimating the value of household items such as old clothes, toys, appliances, etc. that you donated to charity is troublesome for most taxpayers. You can deduct the “fair market value” of these items, but how do you know what that is?  The Salvation Army (www.satruck.org/valueguide.aspx) and Goodwill Industries(www.goodwillpromo.org) both maintain sites that contain ranges of values for common clothing and household items.  If you use TurboTax to prepare your return, it has software that values and manages your charitable donations.

Make a retirement contribution.
One thing that you can still do this year to reduce 2007’s tax liability is make a deductible contribution to a retirement account.  Contributions to traditional IRAs and certain accounts for the self-employed can be made until the due date for your return (without extensions). The annual contribution limit for regular and spousal IRAs is $4,000 for 2007, $5,000 if you’ve turned 50.  You qualify for the full amount of the IRA if you are not covered by a retirement plan at work.  If you are covered, you can take a full deduction if your “modified” adjusted gross income is less than $52,000 for a single person, $80,000 for married joint filers. The deduction phases out from $52,000 to $62,000 for singles and $80,000 to $100,000 for joint filers. 

They were here for 2007 returns, but a number of key tax provisions are in doubt for 2008. Some or all of these could win renewal, but until the reinstatement is signed into law, you shouldn’t count on them.  The deduction for state and local sales taxes permits taxpayers who itemize to elect deducting sales taxes instead of state income taxes expired again after having won a two-year extension. If you reside in a state with no income tax, don’t miss out on this option for 2007, at least.

The IRS reports that many taxpayers who could benefit fail to use the sales tax alternative.  An above-the-line (before calculating adjusted gross income) deduction for higher education costs also ended with 2007.  The provision permits a maximum deduction of $4,000 in each year for individuals whose AGI does not exceed $65,000 ($130,000 in the case of a joint return), or $2,000 for an individual whose AGI does not exceed $80,000 ($160,000 in the case of a joint return).  The above-the-line deduction for up to $250 of expenses paid by an elementary or secondary school teacher for books or other educational items is another item that ended in 2007.  Teachers should continue to keep records for their out-ofpocket expenses and hope for recent history to repeat itself.  This provision has won renewal several times already. 

A provision that allows people over the age of 70 1/2 to make tax-free charitable distributions (contributions) of up to $100,000 per year from their IRAs got a two-year test drive that ended last year. This provision has brought a lot of charitable contributions in its short life, so if charities have their way, this will get renewed.  The 10% credit (to a maximum of $500 for 2006 and 2007 combined) for expenditures on energy-saving building components, such as insulation materials or systems, exterior windows, skylights and doors ended after 2007.  With other priorities to deal with, Congress may decide this deserves to be a one-time-only offer. 
© 2007, Real Estate Information Services, Capitol Assets, Choice Real Estate, Inc. & Choice Real Estate of VA, Inc., & Choice Finance®

   Bob Lauder, Choice Finance®

Mortgage insurance deductability for 2008 | PMI
A provision that allows homeowners to treat mortgage insurance premiums the same as interest has been extended past 2007 through 2010.  The deduction applies to premiums paid or accrued (including for prepaid mortgage insurance) on acquisition (not on refinancing) debt for mortgage insurance. The deduction is phased out for taxpayers (both single and married filing joint returns) with adjustable gross incomes over $100,000. 
© 2007, Real Estate Information Services, Capitol Assets, Choice Real Estate, Inc. & Choice Real Estate of VA, Inc., & Choice Finance®

   Bob Kearns, Choice Finance®

Alternative minimum tax exemption, 2008
Congress finally came through with year-end legislation to shorten the reach of the alternative minimum tax for another year.  The measure temporarily increased the AMT exemption for joint-filing married couples to $66,250 and for single taxpayers to $44,350. Finding a longer-term solution, such as indexing the exemptions (don’t look for the AMT to completely go away soon), will be one of the challenges for Congress in 2008.  However, in a presidential and congressional election year, that task will be even tougher than it was in 2007, so another short-term fix may be the best we can hope for until a new administration can take a crack at it. 

Several other key tax provisions are expiring in 2008, creating more uncertainty for taxpayers. Keep your eye out for action this year on these items.  Short-term, fear of a recession is prompting a rare consensus on the need for an economic stimulus plan that is very likely to include an income tax rebate check for many Americans.
© 2007, Real Estate Information Services, Capitol Assets, Choice Real Estate, Inc. & Choice Real Estate of VA, Inc., & Choice Finance®

    
John Hodges, Choice Finance®  |  Quick tax facts for investors

Loan discount points that you paid on a refinance are generally not deductible in the year you pay them.  However, if part or all of the funds are used to improve your main home, the portion attributable to that use is deductible provided that all the other requirements for deducting points is met.  Points on a second home must be deducted rateably over the life of the loan. 
© 2007, Real Estate Information Services, Capitol Assets, Choice Real Estate, Inc. & Choice Real Estate of VA, Inc., & Choice Finance®

   Mitch Jacobs, Choice Finance®