News

The Mortgage Forgiveness Debt Relief Act of 2007 - provides that effective for calendar 2007 through 2009, discharge ( in whole or in part) of qualified principal residence indebtedness (up to $2 million) will be excluded from gross income. California has not conformed to this Act, but taxpayers may still qualify for exemption under the insolvency provisions of IRC Section 108.

Mortgage Insurance Premiums are deductible as qualified residence interest during 2007 through 2010 with AGI limitations. California has not conformed to this provision of the Act.

23 million taxpayers are expected to benefit from the AMT provisions of the Tax Increase Prevention Act of 2007. The AMT exemption is increased to $66,250 for married couples filing jointly and $44,350 for unmarried taxpayers or filing separately.

Health Savings Accounts are excellent vehicles for turning limited medical deductions into deductible expenses. Please call us to discus setting up your account for 2008. California does not conform to these HAS provisions.

Capital gain tax rates for 2008 - 2010 will be 0% for taxpayers that are in the 10% and 15% ordinary income tax brackets and 15% for taxpayers in 25% and higher brackets.

Dividends enjoy the 15% capital gain rate through 2010.

Charitable contributions must have a cancelled check or receipt.

The "Kiddie Tax", tax on children with investment income has been expanded to include up to the age of 18.

Household help that earns $1,600 in 2008 ($1,500 in 2007) must be reported on Schedule H and the employee must be isswued a Form W-2 reporting the earning to the government.

The government, during examinations, are requiring logs for business use of business and personal use assets: automobiles, cell phones, computers.

Estate and gift tax continue to makes it wise to make gifts up to $12,000 per year per recipient transferring assets at no tax cost.

California Use Tax (similar to the sales tax) applies to internet, shopping channel and mail order purchases made for personal use when no sales tax paid on the purchase.