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®