Some Tax Highlights for Tax Year 2008
The following is a summary of some of the tax law
changes new for 2008:
Non-itemizer property tax deduction. For
2008 (and now 2009), non-itemizers can take an additional,
limited standard deduction for real estate taxes paid in
2008, up to $500 ($1,000 for married couples filing
jointly). The real estate tax up to the limit is added to
the standard Deduction.
Child tax credit. For 2008, the child tax
credit is refundable to the extent of 15 percent of the
taxpayer's earned income in excess of $8,500. Before the
change, the credit was refundable to the extent of 15
percent of the taxpayer's earned income in excess of $12,050
(reflecting inflation adjustments from the original floor of
$10,000).
First-time homebuyer tax credit. First-time
homebuyers will have until July 1, 2009, to claim a new
refundable tax credit for qualifying home purchases in the
U.S. This is only available for qualifying first-time
homebuyers. A first-time homebuyer is one who has not owned
a home for the last three years. If married filing jointly
this applies to both spouses. The credit is equal to the
lesser of 10 percent of the purchase price or $7,500 ($3,750
for married individuals filing separately). Remember, the
first-time homebuyer tax credit must be repaid in equal
installments over 15 years (earlier if the house is sold),
effectively making it an interest-free loan from the
government.
Recovery Rebate Credit. This credit is
figured like the economic stimulus payment the taxpayer may
have received in 2008 except that 2008 tax information will
be used instead of 2007 information. The amount of the
credit is reduced by the amount of the economic stimulus
payment received. The taxpayer will need to provide the
amount they received or the tax preparer will need to go to
IRS.gov to determine the amount. Using 2008 tax information
will normally yield one of the following scenarios.
- 2007 and 2008 tax information result in the same
amount and tax payer received the economic stimulus
payment ' no recovery rebate credit.
- 2007 and 2008 tax information result in the same
amount and tax payer did not receive the economic
stimulus payment ' recovery rebate credit.
- 2008 tax information results in a higher credit
amount and tax payer received the economic stimulus
payment ' recovery rebate credit for the difference.
- 2008 tax information results in a lower credit
amount and tax payer received the economic stimulus
payment ' no recovery rebate credit, but does not have
to pay back the difference.
- No 2007 return was filed, but would have received
payment if had filed, filed 2007 too late to get payment
or tax payer qualifies in 2008 when they did not in 2008
- recovery rebate credit.
Qualified to receive a payment in 2007, but did not file
or filed too late in 2007 to receive payment, but does not
qualify in 2008 ' no recovery rebate credit.
Filing with a pay stub. A frequently
asked question is, 'Can I file a tax return using a Leave
and Earnings Statement (LES) or the last pay stub?'
Although income tax returns may be prepared using a LES or
other documentation of income and federal tax withholding,
the individual income tax return cannot be electronically
filed prior to the ERO's receiving Form W-2 or Form 1099-R.
If the taxpayer is unable to provide a Form W-2 or Form
1099-R, the return may be electronically filed after
February 15th using a completed Form 4852, Substitute for
Form W-2, Wage and Tax Statement, or Form 1099-R,
Distributions From Pensions, Annuities, Retirement or
Profit-Sharing Plans, IRAs, Insurance Contracts, Etc. If
Form 4852 is used, the non-standard W-2 indicator must be
included in the record and Form 4852, signed by the
taxpayer, and must be retained by the ERO in the same manner
required for Forms W-2 and 1099-R.
Filing your return with Liberty Tax will assure you that you
are getting fast, accurate, 100% guaranteed service along
with the maximum deductions. If you file your own return,
feel free to contact us to arrange for a review of your
return to assure that you are getting the maximum
deductions.
Taxes Are Not Fun ' But The Professionals At
Liberty Are!
'Margaree Pertle, Liberty Tax Service