Status of expiring tax provisions
A number of tax provisions have been at the mercy of annual or biennial renewals for budgetary reasons and their on-again, off-again status is often confusing for taxpayers who might want to take advantage of them. Here is where some of these stand at present.
Several perpetually expiring provisions winning two-year reprieves (for 2008 and 2009) last year, include:
(1) The deduction for state and local sales taxes, which permits taxpayers who itemize to elect deducting sales taxes instead of state income taxes. If you reside in a state with no income tax, don’t pass up this option.
(2) An above-the-line (before calculating adjusted gross income) deduction for higher education costs. The provision permits a maximum deduction of $4,000 in each year for those whose AGI does not exceed $65,000 ($130,000 in the case of a joint return), or $2,000 for an individual whose AGI does not exceed $80,000 ($160,000 in the case of a joint return).
(3) The above-the-line deduction for up to $250 of expenses paid by an elementary or secondary school teacher for books or other educational items.
(4) A provision that allows people over the age of 70 1/2 to make tax-free charitable distributions (contributions) of up to $100,000 per year from their IRAs (pay direct to the charity). The 10% credit for expenditures on energy efficient home improvements, such as insulation materials or systems, exterior windows, skylights and doors, which expired in 2007, has been reinstated for 2009. The cumulative maximum is $500. Once again, Congress will need to address the alternative minimum tax, which is in serious need of a general revamping.
The 2008 fix temporarily increases the AMT exemption for joint-filing married couples to $69,950 (up from $66,250 in 2007) and for single taxpayers to $46,200 (from $44,250). Without another fix for 2009, the permanent exemptions of $45,000 (joint) and $33,500 (single) would apply. © 2007, Real Estate Information Services, Capitol Assets, Choice Real Estate, Inc.
