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The Online Advisor

March 2008

What's New in Taxes

New economic stimulus law passes


In an attempt to boost the economy, Congress hammered out a new economic stimulus package in mid-February. The centerpiece of the new legislation, of course, is the highly publicized tax rebate program. However, other tax incentives targeted at the business sector were also included in the law.

Here's a brief look at the major provisions in the new Economic Stimulus Act of 2008.

* Individual tax rebates. Most single filers will be entitled to receive a one-time tax rebate of $600. The rebates are doubled to $1,200 for joint filers. However, these rebate amounts will begin to phase out for higher-income taxpayers. The phase-out begins at $75,000 of AGI for single filers and $150,000 for joint filers, based on 2007 tax returns. Rebate checks are expected to begin arriving in May.

A late addition to the new law also authorizes rebates for individuals who have no tax liability but received at least $3,000 of taxable income in 2007. This covers social security recipients and disabled veterans (or surviving spouses of disabled veterans).

Finally, you may receive an additional payment of $300 for each child under age 17. There is no limit on the number of rebates available for qualifying children.

* Business incentives. Under the new legislation, a business may benefit from the following two tax provisions:

1. Enhanced Section 179 deductions: The new law increases the write-off allowed for assets placed in service in 2008 from $128,000 to $250,000. In addition, the dollar limit for the maximum Section 179 deduction jumps from $510,000 to $800,000. Amounts over this threshold are reduced on a dollar-for-dollar basis.

2. Bonus depreciation deductions: A business may be entitled to a 50% "bonus" depreciation deduction for new equipment placed in service in 2008. Any remainder that is left over after claiming the 50% deduction is still available for regular depreciation deductions.

Finally, the new law also raises loan limits for Fannie Mae, Freddie Mac, and the Federal Housing Authority (FHA). If you have any questions concerning the new tax breaks in the economic stimulus package, give us a call.





For details or for assistance with your tax planning, give our office a call.

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