Lawmakers have passed more than 100 new tax law changes that could help millions of individual taxpayers save money on their taxes this coming season.
"With more than a hundred pro-taxpayer credits and deductions, many taxpayers will qualify for new benefits that may not have been available last year," said Jackson Hewitt Tax Service vice president of tax resources Mark Steber in a statement. "Taxpayers affected by these changes could see significant savings, and with the current recession, it is even more important that taxpayers get all of the tax benefits they deserve."
Steber outlined some money-saving tax law changes for 2008, including:
* Economic Stimulus Payment and Recovery Rebate Credit: This initiative is a two-phased program consisting of the economic stimulus payment and the recovery rebate credit. Phase one was the economic stimulus payment which was an advanced payment of the projected amount of recovery rebate credit available on the taxpayer's 2008 return. Phase two is the 2008 component of the program, so taxpayers who did not receive their full economic stimulus payment in 2008 may qualify for the remainder as a Recovery Rebate Credit on their 2008 tax returns.
* Mortgage Debt Forgiveness Relief Act: Homeowners who experienced foreclosure on their primary home can exclude the canceled debt amount from their taxable income.
* Housing Assistance Tax Act: Taxpayers who pay real estate taxes and are not otherwise eligible to itemize deductions can increase their standard deduction amount by the lesser of real estate taxes paid in 2008, or $500 ($1,000 if married filing jointly).
* Additional Child Tax Credit: The Additional Child Tax Credit is a refundable credit. This year, the income threshold has been decreased to $8,500 from $12,050, allowing certain taxpayers to qualify for up to $533 more per child in a potential refund.
* First-Time Homebuyers Credit: Taxpayers who purchased a new home for the first-time after April 8, 2008, may qualify for a refundable credit up to $7,500. Part of the American Housing Rescue and Foreclosure Prevention Act, this refundable tax credit works like an interest-free loan for all qualified taxpayers. The credit must be paid back in equal parts over a period of 15 years beginning in 2010.
Lawmakers also extended several expired tax benefits, including:
* Tax-free charitable donations for taxpayers 70.5 or older who choose to direct up to a $100,000 donation from a traditional or Roth IRA directly to a charitable organization.
* A two-year extension of the Educator Expense Deduction, which allows teachers an above-the-line tax deduction of up to $250 for out-of-pocket classroom expenses.
* A two-year extension of the Qualified Tuition Deduction, which allows students to directly deduct up to $4,000 of qualified tuition and fees paid to a college or trade school.
* A two-year extension to the sales tax deduction. Taxpayers can claim the greater of their state and local income taxes paid or their state and local sales taxes paid when itemizing deductions. This is of particular interest to taxpayers that live in states with little or no income tax and those that purchased high-ticket items during the year.
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