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Tax Tip of the Week
For the week of
February 25th, 2008



A review of changes affecting your 2007 return


With all the tax law changes recently, you may have forgotten which ones affect your 2007 tax return, and which are for 2008 and beyond.

Here are eight changes that apply to 2007:

For your business return —

  1. Business mileage. The 2007 standard rate for business use of your vehicle is 48.5¢ per mile.

  2. Manufacturing deduction. Officially called the "domestic production activities deduction," the value of this tax break doubled to 6% of your business's qualified production activities. The deduction is available for traditional manufacturers, as well as construction contractors, engineering firms, architects, software developers, and film producers, among others.

  3. Section 179 depreciation. You can elect to deduct up to $125,000 of qualified assets placed in service during 2007.

  4. Work opportunity tax credit. A tax law enacted mid-year 2007 expanded and modified this credit, which is available when you hire workers from targeted groups. More workers are included and a higher wage threshold applies.

For your personal return —

  1. Alternative minimum tax (AMT) exemptions. In December the AMT exemption for 2007 was increased to $66,250 when you're married filing jointly ($44,350 if you're single or file as head of household).

  2. Foreclosure relief. Beginning January 1, 2007, debt forgiven on certain home mortgage loans is no longer considered income.

  3. Husband/wife businesses. Simplified reporting rules are effective beginning in 2007. If you and your spouse operate a sole proprietorship, you can elect to file as a joint venture instead of a partnership.

  4. Mortgage insurance premiums. You may be able to take an itemized deduction for qualified mortgage insurance premiums paid during 2007.

If you have questions about these tax breaks or would like information about other changes, please give us a call.





































































































































































































































































































































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